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COPY: Partnership Agreement Basics

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Questions and Answers

According to the Companies Act 2013, how many partners are required to start a partnership firm?

Maximum of five partners

Exactly fifty partners

Minimum two partners (correct)

At least one partner

What is the purpose of a written partnership agreement?

To limit the number of partners

To formalize the partnership verbally

To avoid the need for partnership deeds

To have a proof in case of legal disputes (correct)

What happens if a partnership firm undertakes unlawful business?

The firm gets tax relief

Partners have no liability

It goes against the definition of Partnership (correct)

Partners are exempt from legal action

How are profits and losses typically shared in a partnership?

Equally among all partners Signup and view all the answers

In a partnership with unlimited liability, what happens if business assets cannot cover liabilities?

Personal property of partners is used to cover debts Signup and view all the answers

What does the registration of a partnership firm under the Indian Partnership Act, 1932 signify?

It certifies the existence of the firm Signup and view all the answers

How are property rights handled in a partnership firm according to the Act?

Each partner is a joint owner and cannot use the property for personal use Signup and view all the answers

In what capacity does a partner act when dealing with outsiders?

Only as a principal Signup and view all the answers

How can a partnership firm be dissolved according to the Act?

Through agreement between the partners or due to death, retirement, insolvency, or insanity of a partner Signup and view all the answers

How does the Act define the management rights in a partnership firm?

Every partner has equal rights in managing the firm Signup and view all the answers