Partnership Business Basics
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Questions and Answers

What is the primary purpose of the Partnership Deed?

  • To fix the capital contribution of each partner
  • To determine the profit-sharing ratio among partners
  • To govern the partnership firms in India
  • To detail the terms and conditions of the partnership (correct)

What is the term for the minimum guaranteed profit given to a partner?

  • Guarantee of Profit (correct)
  • Fluctuating Capital
  • Past Adjustments
  • Fixed Capital

What type of capital requires two accounts to be maintained for each partner?

  • Guarantee of Profit
  • Fixed Capital (correct)
  • Fluctuating Capital
  • Partnership Deed

What is the term for the ratio in which partners share profits and losses?

<p>Profit-sharing Ratio (D)</p> Signup and view all the answers

What is the Act that governs partnership firms in India?

<p>The Indian Partnership Act, 1932 (B)</p> Signup and view all the answers

What type of capital changes with each entry and only requires one account to be maintained?

<p>Fluctuating Capital (D)</p> Signup and view all the answers

What are Past Adjustments related to?

<p>Past errors or omissions in the books of the firm (B)</p> Signup and view all the answers

What is the term for partners' withdrawals from the firm for personal use?

<p>Drawings (C)</p> Signup and view all the answers

What is the collective term for partners carrying on a business?

<p>Firm (C)</p> Signup and view all the answers

What is the written agreement among partners detailing the terms and conditions of the partnership?

<p>Partnership Deed (C)</p> Signup and view all the answers

Study Notes

Partnership Definition and Structure

  • Partnership is a relationship between people who agree to share business profits, carried on by all or any of them acting for all.
  • Partners are individuals who agree to carry on a partnership business and share its profits and losses.
  • A firm is a collective name for partners carrying on a business, with a specific firm name.

Partnership Act and Deed

  • The Indian Partnership Act, 1932 governs partnership firms, and its provisions apply when the Partnership Deed is silent on an issue.
  • A Partnership Deed is a written agreement among partners detailing the terms and conditions of the partnership.

Capital and Accounts

  • Capital is the amount contributed by partners in the firm, which can be fixed or fluctuating.
  • Fixed Capitals mean partner capitals remain fixed and change with capital introduction or withdrawal, requiring two accounts: Capital Account and Current Account.
  • Fluctuating Capitals mean partner capitals change with each entry, requiring only one Capital Account.

Partner Transactions

  • Drawings refer to partner withdrawals from the firm for personal use, in cash or kind.

Profit Sharing

  • Profit-sharing Ratio is the agreed-upon ratio for sharing profits and losses among partners.

Adjustments and Guarantees

  • Past Adjustments refer to adjustments related to past periods due to errors, omissions, or new agreements with retrospective effect.
  • Guarantee of Profit refers to a minimum guaranteed profit given to a partner or partners, which can be provided by a partner, partners, or outsiders.

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Description

This quiz covers the fundamental concepts of partnership, including the definition of partnership, partners, and firm, as well as the relevant Act that governs partnership firms.

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