Class XII Accountancy

PART- A

1. Define Partnership

Section 4 of the Indian Partnership Act 1932 defines Partnership as: “Partnership is 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.”

NB: Section 464 of the Companies Act 2013 empowers the government to prescribe maximum number of partners but it should not exceed 100. The government has prescribed 50 as maximum number of partners under Rule 10 of the Companies (Miscellaneous) Rule 2014.

2. Explain any features of Partnership

a. Association of Persons:

For a valid Partnership, there must be at least two persons.

Section 464 of the Companies Act 2013 empowers the government to prescribe maximum number of partners but it should not exceed 100. The government has prescribed 50 as maximum number of partners under Rule 10 of the Companies (Miscellaneous) Rule 2014.

b. Agreement:

Agreement is the basis of business relationship among partners. This may be either an oral agreement or a written agreement. A written agreement is always better as it helps to avoid future disputers.

c. Carrying on a business:

A Partnership agreement can be framed for the purpose of carrying on a business intending to earn profits.

3. What is a Limited Liability Partnership?

It is a Partnership where the liability of the partners is limited to the extent of their capital contradiction. The agreement of limited liability Partnership must be approved by Register of companies.

4. Explain the legal status of a Partnership firm.

A firm is not a separate legal entity. In other words there is no difference between partners & partnership firm. The following points highlight the legal status of firm:

a. A firm cannot hold property is its name.

b. A firm cannot sue & be sued in its own name.

c. Assets of firm belong to partners.

d. Liability of partners is unlimited, joint & several.

5. Explain any four rights of a partner.

Each partner enjoys the following rights:

a. Right to participate in the conduct & management of business.

b. Right to access to all records, books of accounts to examine & copy them.

c. Right to ownership of Partnership property.

d. Right to be consulted on all important matters relating to partnership.

6. Explain any three duties of partner.

a. To be bound to carry on business of the firm diligently.

b. To be faithful to fellow partners.

c. To act within the expressed or implied authority.

d. To indemnify for the loss canned by his willful neglect

7. What is a Deed?

A Written agreement among all the partners, containing the terms & conditions, agreed upon by all, to govern the business of partnership is called a Partnership Deed.

8. Give any four contents of Partnership Deed.

a. Name, nature & place of business.

b. Names & addresses of all partners.

c. Profit sharing ratio among partners.

d. Capital contribution by partners.

e. Method of valuation of goodwill.

f. Method of settlement of accounts at the time of retirement, death of partners.

g. Procedure for admission & dissolution of firm.

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