Partnership Accounts — Flashcards

Answer

According to the Indian Partnership Act, 1932, 'Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any one of them acting for all.' This me…

Answer

The six main characteristics of a partnership firm are: 1. **Agreement** – Formed by an oral or written agreement. 2. **Number of persons** – Minimum 2, maximum 50 partners. 3. **Business purpose** – …

Answer

Mutual agency means every partner can bind the firm through their actions. For example, if one partner signs a contract for business supplies, it is legally binding on all partners. This allows smooth…

Answer

A partnership deed is a written agreement among partners that outlines the terms of their partnership. It includes details like profit-sharing ratio, capital contribution, interest on capital/drawings…

Answer

In the absence of a partnership deed, the provisions of the Indian Partnership Act, 1932 apply: - Profits shared equally - No interest on capital - No interest on drawings - No salary or commission to…

Answer

A partnership deed usually includes: 1. Name and address of the firm 2. Names and addresses of partners 3. Nature of business 4. Profit-sharing ratio 5. Capital contributions 6. Interest on capital an…

Answer

A fixed capital account maintains a constant balance unless additional capital is introduced or permanently withdrawn. All adjustments like interest on capital, drawings, profit share, etc., are recor…

Answer

In a fluctuating capital account, all adjustments such as interest on capital, drawings, profit or loss share, and salaries are directly recorded in the capital account. As a result, the capital balan…