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Partnership
or firm as it is often called is the 2nd stage in the
evolution of forms of business organization. Partnership
as a form of business organization grew out of the limitations
of individual proprietorship. in sole proprietorship,
the financial resources, managerial skill, risk bearing
capacity were limited. When business activities started
expanding, the arose a need for more capital, more persons
to supervise the business affairs, The partnership form
of organization was developed to overcome the draw backs
of sole trading organization and to meet the expanding
needs of a business requiting a moderate amount of capital.
Here two or more persons (not exceeding 20) form partnership
by making a written or oral agreement that they will
jointly assume full responsibility for the conduct of
business. L H. Haney defines partnership in the following
words. Partnership is the relationship between persons
who agree to carry on a business in common with a view
to private gain.”
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