Sharing Risks in Partnerships

Steps:

• Identify key features of a partnership: multiple owners share management, profits, and liabilities.
• Evaluate each option against partnership advantages for a trader facing business uncertainties.
• Compare to sole trader structure, where one person bears all risks alone.
• Select the option that highlights a clear benefit over operating solo.

Why D is correct:

• In a partnership, risks are shared among partners as per the Partnership Act, reducing individual financial exposure for traders in volatile markets.

Why the others are wrong:

• A: Partnerships lack continuity; they dissolve if a partner leaves or dies, unlike companies.
• B: Decisions often require consensus, slowing them compared to sole traders.
• C: Profit-sharing divides earnings, which can disadvantage high-contributors unlike sole ownership.

Final answer: D