Give a thorough comparison about the benefits and drawbacks of these two business vehicles

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter9: Responsibility Accounting And Decentralization
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Problem 8Q: Define segments and describe how identifying segments within a business might help manage the...
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Give a thorough comparison about the benefits and drawbacks of these two business vehicles

-Company

-Partership

Expert Solution
Step 1

Company:

 

It is a form of business separately created by law as an association of persons who invest money for a common stock.

 

Partnership:

 

It is a form of business where a minimum of two persons come together to form a business and share profits and losses in a fixed proportion.

Step 2

Merits

 

Company:

 

  • The liability of a company is limited in nature unless otherwise stated

 

  • There exists a high chance for diffusion of risk for a company when compared with a partnership.

 

Partnership:

 

  • A partnership business is relatively easy to set up and the operational costs are low.

 

  • Availability of capital is relatively more in company.
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