CUET Commerce Exam  >  General Test Preparation for CUET UG  >  Flashcards: Partnership (Quiz)
Partnership (Quiz)
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Flashcards: Partnership (Quiz) Flashcard | General Test Preparation for CUET UG - CUET Commerce
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FAQs on Flashcards: Partnership (Quiz) Flashcard - General Test Preparation for CUET UG - CUET Commerce

1. What is a partnership in a business context?
Ans. A partnership is a business structure where two or more individuals manage and operate a business together, sharing profits, losses, and responsibilities. Partnerships can take various forms, including general partnerships, limited partnerships, and limited liability partnerships, each with different implications for liability and management roles.
2. What are the advantages of forming a partnership?
Ans. The advantages of forming a partnership include shared financial responsibility, increased resources and skills, enhanced decision-making through collaboration, and tax benefits since partnerships usually do not pay income tax at the entity level; instead, profits and losses are passed through to partners' personal tax returns.
3. What are the potential disadvantages of partnerships?
Ans. Potential disadvantages of partnerships include joint liability, meaning that partners can be held responsible for each other's actions and debts, potential conflicts between partners, and the challenge of making unanimous decisions, which can slow down business operations.
4. How is profit sharing determined in a partnership?
Ans. Profit sharing in a partnership is typically outlined in a partnership agreement, which details how profits and losses will be distributed among partners. This can be based on the percentage of ownership, contributions made by each partner, or another agreed-upon method.
5. What steps should be taken to dissolve a partnership?
Ans. To dissolve a partnership, partners should follow the process outlined in their partnership agreement, which may include notifying partners, settling debts, distributing assets, and filing necessary legal documents. It's also advisable to consult with legal and financial professionals to ensure compliance with laws and regulations.
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