Published on August 20, 2014
8 1 and 3 Mark Questions Q1 Define partnership. Ans. When two or more persons enter into an agreement to carry on business and share its profit and losses, it is a case of partnership. The Indian partnership Act, 1932, defines Partnership as follows: "Partnership is the relation between persons and who have agreed to share the profits of a business carried on by all or any of them acting for all. Q.2 What do you understand by 'partners', 'firm' and 'firms' name? Ans. The persons who have entered in to a Partnership with one another are individually called 'Partners' and collectively 'a firm' and the name under which the business is carried is called 'the firm's name'. Q.3 Write any four main features of partnership. Ans. Essential elements or main features of Partnership : i) Two or more persons: Partnership is an association of two or more persons. ii) Agreement: The Partnership is established by an agreement either oral or in writing. iii) Lawful Business: A Partnership formed for the purpose of carrying a business, it must be a legal business. iv) Profit sharing: Profit of the firm is share by the partners in an agreed ration, if the ratio is not agreed then equally. Profit also includes loss. Q.4 What is the minimum and maximum number of partners in all partnership? Ans. There should be at least two persons to form a Partnership. The maximum number of Partners in a firm carrying an banking business should not exceed ten and in any other business should not exceed ten and in any other business it should not exceed twenty. Q.5 What is the status of partnership from an accounting viewpoint? Ans. From an accounting viewpoint, partnership is a separate business entity. From legal viewpoints, however, a Partnership, like a sole proprietorship, is not separate from the owners.