Chapter 1: Introduction to Partnership
A partnership is a single business in which two or more people share ownership.
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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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