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Dear Teachers,

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These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.

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Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.

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Mujeeb Rahiman C

HSST Commerce

GHSS Pattikkad

Malappuram Dt.

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✉️ mujeebchemmala@gmail.com

9995983075 �

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Chapter -1

Accounting for Partnership

Basic Concepts

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Section 4 of the Act defines a partnership as 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.

Definition

Partnership

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1. Two or more persons

Features of Partnership

Section 464 of the Companies Act 2013, the Central Government is empowered to prescribe maximum number of partners in a firm but the number of partners can not be more than 100.

The Central government has prescribed the maximum number of partners in a firm to be 50 under Rule 10 of the Companies (Miscellaneous) Rules, 2014.

The minimum number of partners in a firm can be two. According to Section 464 of the Companies Act 2013, the Central Government is empowered to prescribe maximum number of partners in a firm but the number of partners can not be more than 100. The Central government has prescribed the maximum number of partners in a firm to be 50.

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  • Agreement may written or oral.
  • Written agreement is called Partnership Deed.

2. Agreement Between the Partners

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The agreement should be for carrying on some business. Which must be lawful.

3. Business

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4. Mutual Agency

The business can be conducted either by all the partners or any of them can act as agents for the other partners

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Profit or Loss must be shared among the partners on the agreed ratio

5. Sharing of Profit

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6. Unlimited Liability

The liability of each partner is unlimited and they are jointly and severally liable for the debts of the firm

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Features of Partnership

1. Two or more persons

2. Agreement Between the Partners

3. Business

4. Mutual Agency

5. Sharing of Profit

6. Unlimited Liability

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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(Articles of Partnership)

Partnership Deed

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  • Partnership is the result of an agreement between two or more persons.
  • It is always better to have the agreement in writing to avoid any dispute.

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The written agreement among the partners is called Partnership Deed or Articles of Partnership

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Contents of

Partnership Deed

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1. Name and address of the firm

ABC ASSOCIATES

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2. Names and addresses of all partners

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3. Nature and place of business

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4. Capital contribution by the partners

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5. Duration of partnership, if any

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6. Accounting period of the firm

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7. Date of commencement of partnership

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8. Rules regarding operation of Bank Account

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9. Profit and Loss sharing ratio

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10. Rate of interest on capital, loan, drawings, etc.

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11. The amount that can be withdrawn by each partner

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12. Salaries, commission, etc. if payable to any partner;

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13. The rights, duties and liabilities of each partner

Rights

Duties

Liabilities

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Contents Partnership Deed

1. Name and address of the firm

2. Names and addresses of all partners

3. Nature and place of business

4. Capital contribution by the partners

5. Duration of partnership, if any

6. Accounting period of the firm

9. Profit and Loss sharing ratio

8. Rules regarding operation of Bank Account

7. Date of commencement of partnership

10. Rate of interest on capital, loan, drawings, etc.

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11. The amount that can be withdrawn by each partner

12. Salaries, commission, etc. if payable to any partner;

13. The rights, duties and liabilities of each partner

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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Rules applicable in the absence of Partnership Deed

OR

if the Deed is silent on any matter

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1. Profit Sharing

The profit or loss shared equally among the partners irrespective of their capital contribution

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2. Interest on Capital

No interest is payable to the partners. If the deed provides for interest on capital, it should be paid only out of profit and if there is loss, no interest can be allowed

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3. Interest on Drawings

No interest will be charged on drawings made by the partners

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4. Interest on loan to the firm

Partners are entitled to get interest at 6% p.a. on loans advanced by the partners. It should be paid even if there is loss

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5. Remuneration to Partners

No one is entitled to get salary or commission

No salary

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Rules applicable In the absence of Deed

1. Profit Sharing

2. Interest on Capital

3. Interest on Drawings

4. Interest on loan to the firm

5. Remuneration to Partners

Equally

Not given

Not charged

6%

Not given

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT