Accounting for Partnership: Basic Concepts
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Questions and Answers

What is the essential feature of a partnership?

  • Public ownership
  • Single owner
  • Shared profits (correct)
  • Limited liability

    • How is profit or loss distributed among the partners in a partnership?

  • Proportionately to the capital invested by each partner (correct)
  • Equally among all partners
  • According to the seniority of the partners
  • According to the number of years in partnership

    • What adjustments are made to rectify past errors in partners' capital accounts?

  • Adjustments in revenue accounts
  • Adjustments in expense accounts
  • Adjustments in liability accounts
  • Necessary adjustments in partners' drawings accounts (correct)

    • What is the minimum number of persons required to form a partnership according to the Indian Partnership Act 1932?

    <p>Two persons</p> Signup and view all the answers

    In which form of organisation do people usually adopt when the business expands?

    <p>Partnership</p> Signup and view all the answers

    According to the Indian Partnership Act 1932, what becomes the basis of the relationship between partners?

    <p>Written agreement</p> Signup and view all the answers

    What is the essential feature of partnership with regards to the business according to the Indian Partnership Act 1932?

    <p>Agreement to carry on some business</p> Signup and view all the answers

    What is the maximum number of partners prescribed by the Central Government in a firm according to the Companies Act 2013?

    <p>50</p> Signup and view all the answers

    What does a partnership firm have apart from the partners constituting it?

    <p>'Separate legal entity'</p> Signup and view all the answers

    How does the Indian Partnership Act 1932 define partnership?

    <p>'Relation between persons who have agreed to share the profits of a business'</p> Signup and view all the answers

    What is the name under which the business is carried called according to the Indian Partnership Act 1932?

    <p>'Firm's name'</p> Signup and view all the answers

    In what form should an agreement between partners be according to the Indian Partnership Act 1932?

    <p>'Written agreement only'</p> Signup and view all the answers

    What is the main reason for adopting the partnership form of organisation?

    <p>To have more capital and larger number of people to manage the business and share its risks</p> Signup and view all the answers

    What is a key peculiarity of accounting for partnership firms?

    <p>Partnership firms come into existence when two or more persons establish a business and share its profits</p> Signup and view all the answers

    According to the Indian Partnership Act 1932, what is the minimum number of persons required to form a partnership?

    <p>Two persons</p> Signup and view all the answers

    What accounts are prepared under both fixed and fluctuating capital methods in a partnership?

    <p>Partners' Capital and Current accounts</p> Signup and view all the answers

    What is the effect of a guarantee for a minimum amount of profit on the distribution of profits among the partners?

    <p>It affects the distribution of profits among the partners</p> Signup and view all the answers

    According to the Indian Partnership Act 1932, what becomes the basis of the relationship between partners?

    <p>Written agreement</p> Signup and view all the answers

    What accounts are prepared under both fixed and fluctuating capital methods in a partnership?

    <p>Both partners’ capital accounts and Profit and Loss Appropriation Account</p> Signup and view all the answers

    What is the basis of the relationship between partners according to the Indian Partnership Act 1932?

    <p>The partnership deed</p> Signup and view all the answers

    What is the name under which the business is carried called according to the Indian Partnership Act 1932?

    <p>Firm's name</p> Signup and view all the answers

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