Fundamentals of Partnership (Basics)

Partners’ Current Accounts are opened when their capital accounts are

• Fixed

• Fixed and Fluctuating both

• Fluctuating

• None of these

The interest on capital accounts of partners under the fluctuating capital account method is credited to

• Interest Account

• Profit and Loss Account

• Partners’ Capital Accounts

• Partners’ Current Accounts

In the absence of an agreement to the contrary, partners share profits and losses in the

• Ratio of their capitals at the beginning of the year

• Ratio of their capitals at the end of the year

• Ratio of average capital

• Equal ratio

In the absence of an agreement to the contrary, the partners are

• Entitled for 6% interest on their capitals, only when there are profits

• Entitled for 9% interest on their capitals, only when there are profits

• Entitled for interest on capital on the bank rate, only when there are profits

• Not entitled for any interest in their capitals

The current account of a partner

• Will always have a credit balance

• Will always have a debit balance

• May have a debit or credit balance

• Can never have a debit balance

Interest payable on the capitals of the partners is changed to

• Profit and Loss Account

• Profit and Loss Adjustment Account

• Realization Account

• Profit and Loss Appropriation Account

Interest on partner’s drawing under a fluctuating capital account is debited to

• Partner’s Capital Account

• Profit and Loss Account

• Drawing Account

• None of the above

Features of partnership are

• Agreement

• Legal Business

• Agency relationship

• Limited liability of all partners

• Maximum number of members is 500

Provisions of Partnership Act, 1932 in the absence of Partnership Deed

• profits and losses of the firm are to be shared equally by partners

• No interest on capital is payable

• Interest is to be charged on drawings @ 6% p.a

• No partner is entitled to get salary or other remuneration

  for taking part in the conduct of the business of the firm

• No interest on loan payable to partners

The written agreement of partnership is most commonly referred to as :

• Agreement

• Partnership Deed

• Partnership contract

• Partnership Act