Chapter 1: Introduction to Partnership
A partnership is a single business in which two or more people share ownership.
Details
The partnership form emerged from the capital and managerial limitations of sole proprietor firm.
The reasons for the emergence of partnership firm are as follows:
1. An individual has sufficient funds but does not have the required skill.
2. An individual has the required skills but lacks sufficient funds.
3. To distribute business risk.
To run a business at a large scale and to expand it, more people, additional capital, skill and managerial ability are required. In such circumstances, more than one person gather to supplement each other and commence a business. Such a form of business organisation means a partnership firm.
Curriculum
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Partnership Quiz10 questions
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What is Partnership?1 m
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What is a partnership deed for a firm ?1 m
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Describe the objectives to prepare a partnership deed.1 m
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How are administrative problems solved, when no written agreement is signed between the partners?1 m
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Describe state partners' capital account methods of a partnership firm.1 m
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Profit of a partner is credited to which account under fixed capital account method?1 m
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The debit balance of current account of partners is shown on which side of balance sheet ?1 m
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Write a journal entry to transfer drawings account to the capital account, at the end of the year.1 m
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Profit and loss appropriation account is a part of which account?1 m
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Practice Quiz35 questions
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Define 'Partnership'.1 m
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In which year was the Partnership Act implemented in India?1 m
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What is a partnership deed ?1 m
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Which type of partnership agreement is desirable ?1 m
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Why is it necessary to have a written partnership deed ?1 m
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How will salary, bonus or commission be given to the active partner of business, if no provision is there for the same in the partnership deed?1 m
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A partner has the right to receive salary as shown in the partnership deed even if the business suffers a loss - True or false ?1 m
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At what rate, interest on loan given by partner to the firm will be calculated, if no provision is there for the same in the partnership deed ?1 m
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How will profit of the business be distributed among partners, if there is no provision in the partnership deed for the same?1 m
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To which account, interest on loan paid to partner is to be debited ?1 m
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What is fluctuating capital account method ?1 m
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What is the other name of fluctuating capital account method ?1 m
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When fluctuating capital account method is adopted, where would you record permanent changes which takes place in the capital of partners ?1 m
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Where would you record interest on drawings when partners capital accounts are kept under temporary capital account method ?1 m
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What is fixed capital account method ?1 m
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What is the other name of fixed capital account method ?1 m
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Which accounts are prepared in the fixed capital account method ?1 m
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In the fixed capital account method, permanent changes in the capital are to be recorded to which account?1 m
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In the fixed capital account method, to which account profit share of partner is to be credited?1 m
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In the fixed capital account method, to which account interest on capital be credited ?1 m
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What is partner’s current account ?1 m
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Why it is necessary to open partners current account ?1 m
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Which kind of balance does partners current account have?1 m
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In fixed capital account method, where would you transfer current account balance?1 m
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Where would you show debit balance of partner’s current account in the balance sheet?1 m
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Write the accounting effect for interest on partners loan.1 m
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Interest on partners loan can be credited to which account instead of crediting it to partners capital or current account ?1 m
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Partners drawing account will be closed and transferred to which account at the end of the year ?1 m
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Why profit and loss appropriation account is prepared ?1 m
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Where would you record closing balance of profit and loss appropriation account ?1 m
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What does debit balance of profit and loss appropriation account suggest?1 m
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What does credit balance of profit and loss appropriation account suggest ?1 m
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On which side of profit and loss appropriation account is interest on drawings of partners shown ?1 m
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What is the provision for interest payable to any partner in the income tax act ?1 m
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What is the new provision for giving more space/advantages to small and medium scale industries and to remove unlimited liability for partners ?1 m
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Chapter 1 Practice Material520 KB
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One Line Answer and Theory1.1 MB
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Ch 1 Introduction to Partnership Text Book11 MB
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Ch 1 Partnership Text Book Exercise2.6 MB
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