1) List out the major characteristics of partnership.

● More than two individuals

A partnership cannot be performed by an individual alone; at least two individuals

are essential for forming a partnership relation. However, there is an upper limit
that is decided for the maximum number of partners.

In banking concerns, a maximum number of partners can be ten, and in case of all
other organizations, this limit is set to maximum twenty partners.

● Contract

When two individuals mutually get ready to do business together, they sign a
written contract in papers stating all the terms and conditions, duties and
responsibilities of all partners as well as profit and loss sharing ratio of all the
partners. Such papers signed by all the partners are known as a legal contract.

Though the spoken contract is equally valid but to avoid any disputes in future, it is
preferred to have a contract in written form.

● Trade

It is mandatory to do a business or any kind of trade for creating a partnership;

purchasing land together does not come under the partnership.

For Instance: If A and B buy land together for making houses for their own
personal use, it will not be considered as a partnership, although if they buy land
together for making houses and selling them, i.e. if it is their business to built and
sell houses, then it will be considered a partnership.

● Collective Organization

In such concern, not all partners need to be active partners; any partner can operate
it on behalf of all other partners as well as all partners altogether can actively
participate in any event of the company.
If any of the partners notice any unethical or non- beneficial conduct happening in
business, he has a right to stop other partners for doing such conduct.

● Profit Allocation

Business is started with the intention of earning profits in return, but it is the rule of
the universe if you get the flowers you will also get thorns along with that.

Similarly, if the business gets a profit, it may also get losses some years, which will
be distributed amidst all the partners in their profit and loss sharing ratio as
mentioned in the contract.

● Partnership Accountability

In partnership, actions of all the partners are interrelated with each other and will
make an impact on the business i.e., if any of the partners has taken any action
regarding the company when he is a partner in it, all partners are equally liable for
that action and its results. As well as liabilities of all the partners are unlimited for
the operations of the company.
2) How the record of issuance of common stock is done ? Explain.

3) Differentiate between preferred stock an common stock.