Business Organisation Partnership Characteristics Features

 

Business Organisation Partnership Characteristics Features:- All BBA 1st semester students’s we are provide the study material and r of BBA . and in this article you can find few year notes. BBA Business Organisation notes 2020 today our team presented BBA Business Organisation previous year question paper for you practise. and special links related to the BBA Business Organisation and all subject question paper and study material. we provided mock paper, question paper, simple paper, unsold paper last five year question paper.

Partnership

Partnership is an association of two or more persons as co-owners who have agreed to carry on a business and share profit and losses among themselves. The partnership may come into existence either as a result of the expansion of the sole concern of by means of an agreement between two or more persons desirous of forming a partnership.

It is the ideal form organization for the enterprise requiring moderate amount of capital and diversified managerial skills.

The formation and management of partnership business organization in india is governed by the ‘Indian’ Partnership Act 1932.

“Partnership may be defined as a relation between persons complement to make contract who agree to carry on a business in common with a view to private gain.”

“A partnership firm, as it is often called, is then a group of men who have joined capital or services fro the prosecution of some enterprise.”

“Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them accordingly.”

Characteristics/ Features of Partnership

• An association of two or more persons.
• Agreement among partner.
• Existence of business.
• Profit motive.
• Valid agreement.
• Character of membership.
• Management.
• Unlimited liability.
• No legal position.
• Non-transferable.
• Utmost good faith.
• Capital contribution.
• Dual role or Principal and agent.
• Registration.

Partnership Deed

BBA Business Organisation Partnership Characteristics Features :-

Partnership deed forms the basis of partnership. It contains all important clauses like the name of the partnership firm contribution of capital sharing of profits, mode of management etc. Partnership is a written and stamped document duly signed by all partners containing all the matters according to which mutual rights, duties and liabilities of the partners in the conduct and management of the affairs of the partnership firm are determined.”

1. Partnership deed is an agreement which may be in written or oral.
2. It is made to have smooth running business and avoid any future disputes amongst partners.
3. Document should be in written form and duly signed by all partners.

Contents (clauses) of Partnership Deed

1. Name and full address of the partnership firm.
2. Name of the partners and their full addresses.
3. The nature of business of the partnership firm.
4. Duration of the partnership firm.
5. Total amount of capital along with contribution of each partner.
6. The profit sharing ratio.
7. The amount of salary and commission payable to any partner.
8. Manner and extent of the withdrawals of the capital by partner.

Rights of a Partner

BBA Business Organisation Partnership Characteristics Features :-

1. Every partner has a right to take part in the conduct and management of the business.
2. Every partner has a right to be consulted before taking important of the decisions.
3. Right to inspection of book of account and to copy the accounts.
4. No new partner admitted without the consent of all partners.
5. Right to share profits equally unless otherwise mentioned in deed or mutually agreed.
6. Entitled to receive interest at 6% per annum on loans given over and above the capital.
7. Property of the firm can be used for the purposes of business.
8. If partner incurred expenses for the protection of the firm from a loss in the normal conduct of business, he is entitled to be indemnified by the firm.
9. Right to retire according to the terms or with the consent of remaining partners.
10. Right to get partnership firm dissolved under appropriate circumstances.

Liability of a Partner

1. Every Partner is liable jointly and separately for the acts of the partnership firm.
2. Every Partner is liable for the wrongful act.
3. Every Partner is liable for fraud negligence and misappropriation of partnership funds.

Registration of Partnership Firm

The registration of partnership firm is not compulsory under the Indian partnership Act 1932. It is on the partners of the firm to get it registered or not to get it registered. It is optional but mostly all prefer to get it registrar of firms of the state.

It provides a legal aid, a reliable proof and conclusive evidence of the existence of partnership firm. Thus, directly the registration is not compulsory but indirectly it is so. It is due to the numerous advantages of registration of a partnership firm. Partnership Characteristics Features

Advantages of Registration

Business Organisation Partnership Characteristics Features :-

1. Advantage to the firm.
2. Advantage to the partners.
3. Advantage to creditors.
4. Advantage to incoming partners.
5. Advantage to outgoing partners.

Right Uneffected by Non-registration

1. Each partner has a right to dissolve the firm.
2. Each partner has right to realise the property of a dissolved firm.
3. The right of third party to file a suit against the unregistered is not affected.
4. The power of an official assignee or receive realise the property of an insolvent partner is not affected.
5. Any suit set off in which the claim does not exceed rupees one hundred only.
6. It does not affect the right of a firm or its partners if the place of the business of the firm is outside india.
7. The right to due for accounts of a dissolved firm.

Dissolution of a Firm

It means closure of the firm or termination of partnership business. When all the members of the firm commonly called as partners, Cease to be the partners of the firm and the firm is closed, it is called dissolution of the firm. It may be voluntary or under compulsion.

According to Section 39 of the Indian Panrtnership Act 1932

“The dissolution of partnership between all the partners of the firm is called the dissolution of the firm.”

Difference Between Dissolution of The Partnership and Dissolution of The Firm

Dissolution of partnership means the termination of the exiting contract amongst the partners due to one or more of the following reasons:

1. Retirement of a partner.
2. Admission of a new partner.
3. Expulsion of a partner.
4. Death of a partner.
5. Insolvency of a partner.
6. Lunacy of a partner.
7. Transfer of shares by a partner with the consent of all the partners.

So the dissolution of partnership devotes the replacement of old arrangement in some form without affecting the partnership business.

When all the members of the firm, commonly called as partners ceases to the partners of the firm and the firm is closed it is called dissolution of the firm.

Dissolution of Firm

BBA Business Organisation Partnership Characteristics Features :-

A distinction should be made between the ‘dissolution of partnership’ and ‘dissolution of form’. Dissolution of partnership implies the termination of the original partnership agreement or change in contractual relationship among partners. A partnership is dissclved by the insolvency, retirement, incapacity, death, expulsion etc., of a partner or on the expiry/completion of the term/venture of partnership. A partnership can be dissolved without dissolving the firm. In dissolution of partnership, the business of the firm does not come to an end. The remaining partners continue the business by entering into a new agreement. On the other hand, dissolution of firm implies dissolution between all the partners. The business of the partnership firm always involves dissolution of partnership but the dissolution of partnership does not necessarly mean dissolution of the firm. Partnership Characteristics Features

What are the merits of Partnership?

1. Easy formation : Like sole proprietorship form of business organization, partnership can be formed and dissolved very easily. All that is required is an agreement among the partners. There are not many legal formalities and too little legal expenses.
2. Pooling of financial resources : A partnership enjoys more financial resources compared to sole proprietorship. If more funds are required, more partners can the admitted.

Formation of firms on partnership basis facilitates the tapping of the savings of different persons. The helps in expanding business and earning more profits, further, new partners can also be admitted to secure more capital needed for the expansion of business.

1. Benefit of specialisation : Different partners have different qualities. In other words, they are expertise in their own fields. Therefore, the benefit of the skills, ability and capacity can be attained.
2. Good decision making : In a partnership the business decision are taken unanimously after a thorough debate. Thus, there are little or no chances of any business decision going wrong.
3. Risk sharing : Any losses sustained by the firm are shared by all the partners on a predetermined basis resulting in much lesser burden falling on the partners than as compared so sole proprietorship.
4. More flexibility : If in future the partners feel that the business has not turned out to be profitable, they can with the approval of all the partners, shirt to some other business without any legal problem.
5. Self motivation : The partner know that all the profits belonging to them. Hence, this thing continuous motivating and all partners work with perfect interest.
6. Personal supervision : it increase the profitability of the business. As a matter of fact the management of joint stock companies.

Registration of Firms (BBA Notes)

The Partnership Act 1932 Provides for the registration of firm with the Registrar of firms appointed by the Government. The registration of a partnership firm is not compulsory. But an unregistered firm certain disabilities. Therefore, registration of a partnership is desirable.

Procedure for Registration

BBA Business Organisation Partnership Characteristics Features :-

A partnership firm can be registered at any time by filing a statement in the prescribed form. The form should be duly signed by all the partners. It should be sent to the registrar of firms along with the prescribed fee. The statement should contain the following particulars :

1. Name of the firm.
2. Principal place of its business.
3. Name of other places where the firm is carrying on business.
4. Name in full and permanent address of all the partners.
5. Duration of the firm (if any).
6. Nature of the firm’s business.

On receipt of the statement and the fees, the registrar makes an entry in the register of firms. The firm so considered to be registered when the entry is made. The registrar issues a certificate of registration. Any change in the above particulars must be communicated to the registers of firms within a reasonable period of time so that so that necessary alteration may be made in the registers of firms. The register is open for inspection of payment of a nominal fee. Partnership Characteristics Features

 

Business Organisation External Reconstruction Chapter Wise Notes

External Reconstruction

External Reconstruction : Reconstruction means reorganisation of a company ‘s financial structure .in reconstruction of the company ,usually the assets and liabilities of the company are revalued and the losses suffered by the company are written off by a deduction of the paid up value of shares and/or varying of the right attached to different classes of share and compounding with the credit it may be done without liquidating the company and forming a new company in which case the process is called internal reconstruction. However, there may be external reconstructions in which case the undertaking being carried on by company is transferred to a newly started company consisting substantially of the some shareholders with a view to business of the transferor company being continued by the transferee company. An attempt is made that the newly started company has a sound financial structure and a good set of assets and liabilities recorded in the books of the transferee company at their fair values. Partnership Characteristics Features

 

Difference between External Reconstruction and Amalgamation

BBA Business Organisation Partnership Characteristics Features :-

From the point of view of an accountant, external reconstruction is similar to amalgamation in the nature of purchase; the book of the transferor company are closed and in the books of the transferee company, the purchase of the business is recorded. But otherwise external reconstruction and amalgamation differ as follows :

1. In external reconstruction, only one existing company is involved where as in amalgamation there are at least two existing companies which amalgamate.
2. In external reconstruction, a new company is certainly formed whereas in amalgamation new company may be formed or in the alternative one of the existing companies may take over other amalgamating company or companies and no new company may be formed.
3. The objective of external reconstruction is to reorganizes the financial structure of the company. On the other hand, the objective of amalgamation is to cut competition and reap the economic large scale.

Short note on unrealised Profit on stock

BBA Business Organisation Partnership Characteristics Features :-

Unrealized profit on Stock : The question of the mutual owings on account of sale goods may be connected with goods sold by the transferor company to the transferee company or vice versa but still remaining unsold. It should be remembered that the transferee company will acquire all the stock of the transferor company, including the goods sold by it to the transferor company and that in the books of the fransferor company, the stock will be recorded at invoice price (i.e., including the profit charged by the transferee company). On re-acquisition of the goods, the profit must be eliminated. The method is simple. While making the entries for the acquisition of the business of the transferor company, the figure of stock should be reduced by the profit charged by the transferee company—the figure of goodwill or capital reserve in the case of amalgamation in the merger will be automatically get adjusted.

But if it was the transferee company that had purchased goods from the transferor company and the goods or part of them had remained unsold, the way to elimination the unrealized profit charged by the transferor company is to debit general reserve or profit and loss account in the case of amalgamation in the nature and to credit stock account by the amount of unrealized profit.

Advantage of Business Combinations

BBA Business Organisation Partnership Characteristics Features :-

1. Elimination of Wasteful Competition: The businessmen who were trying to beat each other in the market prior to the combination, now work together under one management. This ends wasteful competition enables optimum utilization of variable resources.
2. Benefits of Large Scale Business: Specialisation, use of waste and by-products, automation, standardization and uniformity of quality, savings in transport, pooling of patents, arrangements for repairs and maintenance, research and development, rationalization, etc., are possible due to large scale business.
3. Benefits of Monopoly: Through combinations, businessmen may secure the advantages of reduced costs of production and distribution due to control over the market and the steady demand and elimination of cross freights.
4. The balance between Demand and Supply: Better adjustment between demand and supply reducing trade cycles. Combinations facilitate foreign trade, it is easier for the government to control a few combinations than a large number of small firms.
5. Efficient Management: Functional specialization, combined judgment, lower overheads, comparative accounting, office mechanization, etc., are possible if a big unit is formed by merging small units.
6. Financing: Higher goodwill and better security resulting is more economical financing, plowing back of profits, internal adjustment of funds, proper utilization of capital. Greater strength and stability during economic crisis etc.
7. Greater Stability and Growth: Greater strength to withstand depression and other economic arise is resulting in greater stability and growth.
8. United Action: Spirit of co-operation and mutual understanding among competing for business firms and united action against common problems.
9. Economical use of Sources: United control enables economical use of resources and improvement in the efficiency of management. The pooling of knowledge and experience becomes possible.
10. To become a Big Businessmen: The person, who dreams of becoming a big businessman, the business combination is a good medium of fulfilling his desire. With the help of business combination, a person can reach on the top in the business world.
11. To face Marketing Problem: Due to the expansion of the market, marketing problems arise. Marketing problems mean advertisement, distribution, after sale services, etc. A single unit faces difficulties in solving these problems. But if a business combination is there, then they can be faced easily.
12. Use of Modern Technology Possible: Because of combination, all factors are easily available. Hence, benefits can be availed by using the modern technique. Its main advantage is to produce a good quality product at a low cost.
13. Benefits from Foreign Intelligence Possible: By forming a business combination with foreign businessmen, benefits from their intelligence can be enjoyed. Partnership Characteristics Features
14. Easy to Implement the Government Policy: Business combination eliminates the unorganized form of business. The government faces a problem in controlling the small units. The government cannot implement its policies on them. But once these units are organized, the government can easily control them. On controlled units, policies can be easily implemented.

Disadvantages of Business Combination

BBA Business Organisation Partnership Characteristics Features :-

1. The exploitation of Investors and Suppliers: Monopoly concerns lure investors by presenting a rosy picture of their proposal and exploit genuine investors. As the sole or dominating buyer, a monopoly house dictates prices of materials and machinery to its suppliers. Big businessmen may indulge in speculation to manipulate share prices at the stock exchange.
2. Evils or Large Scale Business: Large scale business gives birth to the trend of monopoly. Very few people control the market for various products. They charge the prices of these products as per their own wish and exploit the consumer. In this manner where at one side large scale business, monopoly being the main problem.
3. Over Capitalisation: Combinations of a permanent and long-term nature tend to be over-capitalized. Over-capitalisation is against the interest of the combination, the shareholders and the community at large. Large sums may be paid for intangible assets of combining firms which may fail to give proportionate returns. There is an inefficient use of capital resources.
4. Ruining of Small Business: In case of monopolistic combine forces, small competitors to go out of business. By adopting price-cutting and other unfair means, it squeezes every possible competitor and roots out all opposition. Giant combines block entry of fresh blood into the industry.
5. The exploitation of consumers: by restricting output, the prices of their products as per their own wish exploit consumers. Due to its monopoly power, it may operate in a conspiracy against the consumer.
6. Greater Risk: Due to the concentration of resources, risks are increased after combination, there are risks also due to the public distrust, danger to legal action, possibility of inefficient and dishonest management. All eggs are put in one basket, the contract of the combination may not be kept and every unit places itself at the mercy of erstwhile rivals.
7. Instability in the Industry: A combination creates instability by not adjusting output and prices to changing market conditions. Failure of large combine results in large scale unemployment and other disturbances in the economy.
8. Slow Economic Progress: Monopolies do not care for the development of new methods and techniques. They tend to discourage innovation and creativity because of guaranted profits. They try to block new inventions that involve dislocation of existing conditions.
9. The concentration of Economic Power and Political Corruption: Combinations lead to concentration of wealth in a few hands. Monopolists try to gain special favor from the government through political corruption and pose a danger to democracy. Economic power gives control over the social life of people and equality of opportunity is denied.

Uneven Distribution of National Resources: By operating at less than the optimum size, a monopoly combine size, a monopoly combine misdirects the productive resources of the society and thereby operates against the public interest.

---

BBA Business Low Question Paper 2018-2020

 

Follow me at social plate Form