Page 76 - Office Practice and Accounting -9

5. Quasi-partner: A quasi partner is the one who doesn't contribute the capital
but lends money as loan to the firm. He does not participate in the management but
receives interest on such loan as long as it is not paid off.
6. Incoming partner: Such a partner who joins an ongoing or already existing
partnership firm is called incoming partner. A new partner can be added to the
partnership firm with the mutual consent and agreement of all the other remaining
partners. However, he is not liable for the debt of the firm which existed before
his entrance in the business. These partners have to pay extra amount to enter the
business.
7. Outgoing partner: This type of partner is also known as retiring partner because
he is the partner who is leaving the firm with the consent of all other partners. He
gives a written notice to all partners. He is liable to the debts of the firm which existed
before his retirement
8. Minor partners: If all the existing partners, who are usually major, consent, a
minor may be admitted to the partnership. A minor partner has right to share of the
profit and property of the firm according to the partnership agreement; and he can
inspect or copy any of the accounts of the firm. His share in the firm is liable for the
debts of the firm but he is not personally liable for any such debt.
9. Secret partner: The partner who contributes capital, shares profits and losses,
bears liability, participates in the management but remains secret to the outsiders is
known as a secret partner.
Advantage and disadvantage of partnership firm

Advantage of partnership

1. Partnership can be easily formed because any two or more than two persons
agreeing to carry on business together may become partners and get themselves
registered as such. The case of formation is, of course, not as in the case of “one
man’s business” because the known and trusted parties worthy of becoming
partners are not easily available while the necessities of registration and other
legal formalities involve time and expense. But apart from these factors, the sole
trading concern and partnership stand on the same level.
2. ‘The motive to devote one’s entire energies with a view to maximize profits is
fairly strong.’ So great is the risk arising from unlimited liability so direct is the
relation between effort and reward, so personal is the relation between partners,
as great in partnership as in sole proprietorship because in the latter, the fruits of
one’s labor are enjoyed entirely by one’s own self, whereas in the former they have
to be shared with other partner or partners.
3. The objects of membership and the amount of capital of the firm are determined
by mutual agreement between the partners and can be changed with their consent.
So, partnership is flexible in nature.
4. Partnership commands greater business resources than sole proprietorship.
The availability of increased capital and skill is a distinct advantage. Certain
businesses require large investment or the combined judgment of several heads

72 Office Practice and Accounting 9