Accountancy Part AAccounting for Partnership

Which of the following is not an essential feature of Partnership?

Which of the following is not an essential feature of Partnership?

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Issue of Prospectus

A partnership needs at least two persons, an agreement, a business carried on, sharing of profits and mutual agency. A prospectus is an invitation to the public issued by a company to raise share capital; a partnership never invites the public to subscribe.

Option (2) The Partners should carry some business — A true feature.

Option (3) There should be at least two persons — A true feature.

Option (4) There should be agreement between partners to do business and share profits and losses — A true feature.

NCERT (2026-27 edition):
Definition of partnership and its essential features – “… The essential features of partnership are : (i) To form a partnership, there must be at least two persons; (ii) It is created by an agreement; (iii) The agreement should be for carrying on some legal business; (iv) sharing of profits and losses; and (v) relationship of mutual agency among the partners.”

NCERT (2026-27 edition):
Issue of Prospectus – “… The company first issues the prospectus to the public. Prospectus is an invitation to the public that a new company has come into existence and it needs funds for doing business. It contains complete information about the company and the manner in which the money is to be collected from the prospective investors.”