Forms of Business Organisation · Class 11 · CBSE · Commerce Business Studies
In a partnership firm, the principle of mutual agency means that:
Practice question from Forms of Business Organisation (Class 11 · CBSE · Commerce Business Studies), with the correct answer and a step-by-step solution.
medium · MCQ · Q-C9304A
In a partnership firm, the principle of mutual agency means that:
- A.Every partner must contribute an equal amount of capital
- B.Each partner is both an agent and a principal of the firmCorrect answer
- C.Only the partner who invested the most capital can manage the firm
- D.A partner is liable only for transactions personally undertaken by them
Solution
Mutual agency is an essential feature of partnership. Each partner can act as an agent of the firm and the other partners, while also being a principal when another partner acts on behalf of the firm.
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