Partnership Accounting Quiz & Flashcards: Questions & Answers

True or false: Partnership business requires a minimum of 3 partners?

True or false: The business carried by a partnership firm must be legal?

True or false: Partnership business can be formed through an oral agreement?

True or false: Partnership business involves sharing of profits among the partners?

True or false: The liability of partners in a partnership business is limited?

Meaning of Partnership Business

A partnership business involves two or more individuals who join together to conduct business operations and share profits and losses.
Defined by the Partnership Act, 1932, partnership is the relationship among individuals who agree to share the profits of a business operated by any or all of the partners.

Features of Partnership

Number of Partners: Requires a minimum of 2 partners; the Partnership Act, 1932 does not specify a maximum limit.
Agreement: Establishes the partnership, which can be either oral or written.
Lawful Business: The partnership must engage in legal business activities.
Profit Sharing: Partners must reach an agreement on how to share profits generated by the business.
Liability: Partners have unlimited liability, meaning they are personally responsible for all business debts and obligations.

Partnership Deed

A partnership deed is the formal document outlining all agreed terms and conditions among the partners.

Test your knowledge on partnership accounting with this quiz! Learn about the meaning of partnership business, the features of a partnership, and the basics of accounting for partnership firms. Brush up on your understanding of profit and loss sharing, as well as the legal aspects of partnerships.