CA Foundation Exam > CA Foundation Questions > A partnership firm can raise its capital:a)By...
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A partnership firm can raise its capital:
- a)By the issue of Equity shares only
- b)By the issue of convertible preference shears only
- c)By the issue of non-convertible preference shares
- d)None of the above
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
A partnership firm can raise its capital:a)By the issue of Equity shar...
Partnership firms are not allowed to issue shares as they are not considered as a separate legal entity. Hence, they cannot raise capital by the issue of shares. Let's explore this in more detail.
What is a partnership firm?
A partnership firm is a type of business structure where two or more persons come together to carry on a business with a view to earning profits. In a partnership firm, the partners are jointly and severally liable for the debts and obligations of the firm.
Can a partnership firm issue shares?
No, a partnership firm cannot issue shares as it is not considered as a separate legal entity. In other words, a partnership firm does not have a separate legal identity apart from its partners. Therefore, it cannot raise capital by issuing shares.
How can a partnership firm raise capital?
A partnership firm can raise capital by the following ways:
1. Contributions from partners
Partnership firms can raise capital by way of contributions from partners. Partners can contribute additional capital to the business as and when required.
2. Borrowing
Partnership firms can borrow funds from banks, financial institutions, or other lenders. This can be in the form of a term loan, working capital loan, or any other form of credit.
3. Profits
Partnership firms can also raise capital by retaining profits and plowing them back into the business. This can help in funding future growth and expansion plans.
Conclusion
In conclusion, a partnership firm cannot raise capital by issuing equity shares or any other form of shares. They can only raise capital by way of contributions from partners, borrowing, or retaining profits.
What is a partnership firm?
A partnership firm is a type of business structure where two or more persons come together to carry on a business with a view to earning profits. In a partnership firm, the partners are jointly and severally liable for the debts and obligations of the firm.
Can a partnership firm issue shares?
No, a partnership firm cannot issue shares as it is not considered as a separate legal entity. In other words, a partnership firm does not have a separate legal identity apart from its partners. Therefore, it cannot raise capital by issuing shares.
How can a partnership firm raise capital?
A partnership firm can raise capital by the following ways:
1. Contributions from partners
Partnership firms can raise capital by way of contributions from partners. Partners can contribute additional capital to the business as and when required.
2. Borrowing
Partnership firms can borrow funds from banks, financial institutions, or other lenders. This can be in the form of a term loan, working capital loan, or any other form of credit.
3. Profits
Partnership firms can also raise capital by retaining profits and plowing them back into the business. This can help in funding future growth and expansion plans.
Conclusion
In conclusion, a partnership firm cannot raise capital by issuing equity shares or any other form of shares. They can only raise capital by way of contributions from partners, borrowing, or retaining profits.
Community Answer
A partnership firm can raise its capital:a)By the issue of Equity shar...
Partnership firm could only raise its capital through partners. partners can introduce more capital if needed.
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A partnership firm can raise its capital:a)By the issue of Equity shares onlyb)By the issue of convertible preference shears onlyc)By the issue of non-convertible preference sharesd)None of the aboveCorrect answer is option 'D'. Can you explain this answer?
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A partnership firm can raise its capital:a)By the issue of Equity shares onlyb)By the issue of convertible preference shears onlyc)By the issue of non-convertible preference sharesd)None of the aboveCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A partnership firm can raise its capital:a)By the issue of Equity shares onlyb)By the issue of convertible preference shears onlyc)By the issue of non-convertible preference sharesd)None of the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A partnership firm can raise its capital:a)By the issue of Equity shares onlyb)By the issue of convertible preference shears onlyc)By the issue of non-convertible preference sharesd)None of the aboveCorrect answer is option 'D'. Can you explain this answer?.
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