10 Questions
What is the primary purpose of the Partnership Deed?
To detail the terms and conditions of the partnership
What is the term for the minimum guaranteed profit given to a partner?
Guarantee of Profit
What type of capital requires two accounts to be maintained for each partner?
Fixed Capital
What is the term for the ratio in which partners share profits and losses?
Profit-sharing Ratio
What is the Act that governs partnership firms in India?
The Indian Partnership Act, 1932
What type of capital changes with each entry and only requires one account to be maintained?
Fluctuating Capital
What are Past Adjustments related to?
Past errors or omissions in the books of the firm
What is the term for partners' withdrawals from the firm for personal use?
Drawings
What is the collective term for partners carrying on a business?
Firm
What is the written agreement among partners detailing the terms and conditions of the partnership?
Partnership Deed
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.
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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