Types of Partnership Deed

What is a Partnership? A partnership is a form of business in which two or more persons conduct the business activities or any of the persons involved acting in behalf of all of them. What is a Partnership Deed? A partnership deed is an agreement made between two individuals who have agreed to share the … Read more

Types of Partnership

The types of partnership are as below: Active Partner: Active partner is also named as a working partner. He takes active part in the management and running of the business. He also invests in the partnership business. Sleeping Partner: Sleeping partner is one who: Invest in the business. Shares gains and losses of the business. … Read more

Procedure to Open Books of Partnership

At the time of formation of partnership, each partner contributes his capital either in the form of cash or non-cash. Separate accounts of capital are opened to record the investment of each partner. The partner can invest in the business in any of the following ways. By contributing cash. By contributing non-cash assets. By combining … Read more

Partnership Deed

What Is a Partnership Deed? The document which contains terms and conditions of partnership is known as Partnership Deed. In the absence of an agreement, the partnership Act is applied, However, the act leaves it to the discretion of partners. The written agreement between partners will be helpful in case of disputes between the partners. … Read more

Fixed and Fluctuating Capital

The capital account of partners can be kept in either of the following ways: Fixed capital method Fluctuating capital method Fixed Capital Method Under the fixed nature of capital, each partner’s capital remains constant from the start of the partnership until its conclusion. No adjustments, such as interest on capital, salary/commission, or profit or loss … Read more

Reserves in Partnership

Definition A Reserve, by definition, is that part of the profit that is not distributed among the business’s owners but retained in the business. Explanation If the entire profit made by a firm is credited to partner’s current accounts, the partners become entitled to withdraw it, in cash, from the firm’s coffers. This can seriously … Read more

Year End Adjustments in Partnership

In addition to the usual year end adjustments (e.g. for accrued and prepaid expenses) made by traders to ensure correct measurement of year’s profits and a true reflection of their financial position in the balance sheet, the following adjustments are peculiar to partnership firms: (a). If any expense has been paid by a partner on … Read more

Distribution of Profit in a Partnership

Profits or losses made by a firm should be divided among its partners per the provision of their partnership deed. However, if there is no written or oral agreement among the partners, the law prescribes that partners should share profits and losses equally. Under the law, no partner is entitled to get anything out of their firm except a … Read more