Answer(1):
Partnership- It is a firm or arrangement of two
or more partners that come together in a business for a common
motive and are personally liable for obligations of partnership
firm.
Advantages- Are as following:
- It is easy to form and dissolve.
- Less formalities
- It is easy to run and calculate the profits and other
share.
- There are more partners, more capital in the business.
- Ownership and control are combined.
Disadvantages- Are as following:
- Partners have unlimited liabilities, they are personally liable
for the partnership firm's debt and other obligations.
- Each partner is an agent and is liable for actions of other
partners also.
- If a partner leaves or joins, there is a lot of calculation in
capital, profits and assets that may be costly.
Corporation- It is a separate legal entity
formed by shareholders and established by charter for business.
Advantages- Are as following:
- It is a separate legal entity where shareholders and employees
of corporation are not personally liable for any obligation of
corporation.
- Corporation has perpetual existence that says, business will go
on in future.
- In case of public company, transfer of shares is easy.
- In case of S corporation, profits are passed through so they
save taxes.
Disadvantages- Are as following:
- Forming a corporation is complex, time taken and there are so
many paper work and legal formalities.
- In case of C corporation, shareholders are subject to double
taxation.
- Corporation is not easy to wind up.
- There is conflict of interest between shareholders and
managers.
Answer(2): Tasks performed by financial
manager- Are as following:
- Financial manager does financial planning.
- He takes the investing decisions, he and his team analyzes the
project and approves the project with highest estimated cash
inflows.
- He takes the financing decisions, he and his team analyzes the
sources of finance and chooses the best source of funding that has
lower cost of capital so that weighted average cost of capital can
be lower.
- He ensures the liquidity in the business.
- He also takes dividend decision.