Accounting For Partnership Firms- Fundamentals Flashcards
What is Partnership
Relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all. (Indian Partnership Act, 1932, Section 4)
State all the features of Partnership.
1) Two or More Persons
2) Agreement
3) Maximum partners
4) Lawful
5) Profit Sharing
6) mutual agency
Explain two or more persons as feature of partnership.
There must be at least 2 persons Maximum limit is 50 partners.
Explain Lawful as feature of partnership.
It should be a lawful business. Co-owners of property is not partnership.
Explain Profit sharing as feature of partnership.
The partners must share the profits, but not essential that all partners must share losses.
Explain mutual agency as feature of partnership.
As agent, one represents other partners and binds them through their acts.
As principle, one is bound by the act of other partners..
Explain mutual agency as feature of partnership.
As agent, one represents other partners and binds them through their acts.
As principle, one is bound by the act of other partners..
Explain liability as feature of partnership.
Unlimited liability and they do not have separate legal entity.
What is partnership deed?
Written document with all the terms and conditions of partnership. Should follow the provision of Stamp act and registered with registrar of firms preferably.
What are the rights of partners?
1) Participate in management
2) Consult about the affairs of business
3) Inspect books and have copy of it
4) Share profit or losses
5) Not to allow admission of new partner
6) Retire after giving proper notice
