Chapter 1 Accounting for Partnership-Basic Concepts
CHAPTER 1: ACCOUNTING FOR PARTNERSHIP – BASIC CONCEPTS – MICRO NOTES NATURE OF PARTNERSHIP Definition (Sec 4): Relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all. Essential Features: Two or more persons (min 2, max 50), Agreement (written/oral), Lawful business, Sharing of profits, Mutual agency (every partner is agent of firm), Unlimited liability. PARTNERSHIP DEED Meaning: Document containing terms of partnership. Written deed preferable. Contents: Name, address, nature of business, capital contribution, profit sharing ratio, interest on capital/drawings/loan, salary/commission to partners, admission/retirement/death rules, dispute resolution, dissolution settlement. Provisions of Indian Partnership Act, 1932 (if Deed is silent): Profits & losses shared equally, No interest on capital, No interest on drawings, No salary/commission to partners, Interest on partner's loan @6% p.a. PARTNERS' C...