Fundamentals of Partnership-Level 1
About Lesson

Why do you need a Partnership?

We have learned about sole proprietorship in our XI class and learned about accounting for sole proprietor and their financial statements (B/s, P&L Account). 

Now if you need to expand your business, you would need: –

  • More capital
  • More working hands
  • Someone to share some amount of inherent risks too.

In such situations, a person would look for a partner who can help with above 3 problems.

  • Someone who can contribute more capital
  • Someone who can take care of some operations as with expansion, staff and area of operation do increases and one person can’t take care of everything.
  • Every business has some inherent risksinvolved in it and to share that risk, it is better to have someone who can share those risks too.

Key Terms: –

  • A system which takes care of above problems and recording business transactions for such arrangement is called Partnership Accounting.
  • The arrangement under which it is made is called Partnership.
  • The business structure which comes in to existence is called Partnership Firm
  • The person who arranges all these things are called Partners.

Exercise Files
1. Why do we need Partnership.pdf
Size: 155.10 KB
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