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UNIT-1 Partnership Accounts

The document discusses partnership accounts, beginning with definitions and characteristics of partnerships. A partnership is defined as an association of two or more persons who agree to carry on business jointly and share profits/losses. Key characteristics include agreement between partners to share profits of lawful business. It also describes the contents of a partnership deed when the agreement is written, including names of partners, type of business, capital contributions and profit/loss sharing ratios. Finally, it provides some provisions under the Indian Partnership Act of 1932 that apply if no partnership deed exists, such as equal profit sharing and no entitlement to interest on capital or partner loans.

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Prashant Hubaratti
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101 views8 pages

UNIT-1 Partnership Accounts

The document discusses partnership accounts, beginning with definitions and characteristics of partnerships. A partnership is defined as an association of two or more persons who agree to carry on business jointly and share profits/losses. Key characteristics include agreement between partners to share profits of lawful business. It also describes the contents of a partnership deed when the agreement is written, including names of partners, type of business, capital contributions and profit/loss sharing ratios. Finally, it provides some provisions under the Indian Partnership Act of 1932 that apply if no partnership deed exists, such as equal profit sharing and no entitlement to interest on capital or partner loans.

Uploaded by

Prashant Hubaratti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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UNIT-1

PARTNERSHIP ACCOUNTS
MEANING AND DEFINITION OF
PARTNERSHIP
 Meaning: Partnership is an association of two or
more persons who agree to carry on a legal
business jointly and share the profits or losses
arising from that business in an agreed
proportion or ratio.
 Definition: Section 4 of the Indian Partnership
Act, 1932 defines a partnership as “ the relation
between persons who have agreed to share the
profits of a business carried on by all or any of
them acting for all”.
Features or Characteristics of Partnership
1. Two or more persons
2. Agreement
3. Lawful business
4. Sharing of profits
5. Mutual Agency
6. Unlimited liability
Meaning and Contents of Partnership Deed
 Meaning: When the partnership agreement is written and signed by all the partners, and is
duly stamped according to the Stamp Act, it is called “Partnership Deed”.
 Contents:
1. The name and address of the firm.
2. The names and addresses of the partners.
3. The type and nature of the business.
4. The principal place of business.
5. The date of commencement of partnership.
6. The duration of the partnership firm.
7. The amount of capital to be contributed by each partner and the manner of contribution.
8. The amount of withdrawal that can be made by each partner and the manner of
withdrawal.
9. Profit or loss sharing ratio.
10. Rate of interest on partners’ capital, loan and drawings.
11. Partners’ salary, commission or any other remuneration payable to any partner to any
partner for any extra work done for the firm.
12. The rights, duties and liabilities of the partners.
13. The method of maintaining books of accounts.
14. Valuation of goodwill, other assets, etc., on admission, retirement or death of a partner.
15. Procedure of dissolution and settlement of accounts, etc.
Provisions of Indian Partnership Act,
1932 in the absence of Partnership Deed
1. Profit sharing proportions------equal
2. Interest on capital--------not entitled
3. Interest on drawings--------not entitled
4. Interest on Partners Loan--------6% p.a
5. Remuneration for firms work-------not entitled
6. Books of account should be kept at the
principal place of the business.
7. All partners have got right to take part in the
management of the business.
Any Questions?
THANK YOU
HAVE A NICE DAY

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