Which principle allows each partner to act as an agent of the partnership in conducting its business?
Correct answer: B. Mutual agency
- A. Unity of ownership
- B. Mutual agency
- C. Separate personality
- D. Perpetual succession
Explanation
Mutual agency means that each partner can represent the firm and bind the other partners while acting within the ordinary scope of business. Separate personality and perpetual succession are characteristics associated mainly with companies.
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About Nature and Forms of Business Organisation
Business organisation combines people, capital, materials and entrepreneurship to produce goods or services and earn profit, while also meeting customer and social needs. Coverage includes sole proprietorships, partnerships, companies and cooperatives, with comparisons of ownership, liability, control, profit sharing, continuity and legal status.
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