Answer the following questions:

Mention any four merits of partnership firms.

Partnership firms are characterized by the division of ownership between two or more partners. In the Partnership Firm Act of 1932, it is defined as the relation between the persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Four merits of partnership firms are as follows –

1. These firms are easily formed without hindrance from legal aspects with a larger capital investment because of the presence of more owners.

2. More owners also translate into better managerial ability which increases efficiency and the loss in business is also borne by all involved.

3. Since the partners have unlimited liability, it increases the credit worthiness of the business.

4. Partnership firms can be easily dissolved as a partner who does not wish to continue just needs to notify the others involved fourteen days before. It can also be dissolved through consent of all partners.