Introduction:
Partnership is a relation of mutual trust and faith.In order to maintain this trust, it is necessary that the partnership accounts be maintained in an honest , accurate and equitable manner.
Partnership accounts should present a ''true and fair'' picture of partnership firm.
Definition:
As per Section 4 of Indian Partnership Act, 1932, defines partnership as follows:
''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 ''.
Main Features or Essential or Characteristics of Partnership:
Following are;
1.Two or more persons:
There must be at least two persons to form a partnership.Partnership Act does not specify the maximum number of persons, but Section 464 of Indian Companies Act, 2013, restricts the number of partners to 50.
2.Agreement:
Partnership is the result of an agreement.It must come into existence by an agreement and not by the operation of law.
3.Existence of business and Profit motive:
Partnership can be formed for the purpose of carrying on some business with the intention of earning profit and such business must be legal.
4.Sharing of Profits:
The agreement between the partner must aimed at sharing the profit of the business.If some persons join hands to run some charitable activity, it will not be called partnership.
5.Relationship of Principal and Agent:
An agent, because he can bind the other partners by his acts and a principal, because he himself can be bound by the acts of the other partners.
Rights of a Partner:
following are:
Partnership is a relation of mutual trust and faith.In order to maintain this trust, it is necessary that the partnership accounts be maintained in an honest , accurate and equitable manner.
Partnership accounts should present a ''true and fair'' picture of partnership firm.
Definition:
As per Section 4 of Indian Partnership Act, 1932, defines partnership as follows:
''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 ''.
Main Features or Essential or Characteristics of Partnership:
Following are;
1.Two or more persons:
There must be at least two persons to form a partnership.Partnership Act does not specify the maximum number of persons, but Section 464 of Indian Companies Act, 2013, restricts the number of partners to 50.
2.Agreement:
Partnership is the result of an agreement.It must come into existence by an agreement and not by the operation of law.
3.Existence of business and Profit motive:
Partnership can be formed for the purpose of carrying on some business with the intention of earning profit and such business must be legal.
4.Sharing of Profits:
The agreement between the partner must aimed at sharing the profit of the business.If some persons join hands to run some charitable activity, it will not be called partnership.
5.Relationship of Principal and Agent:
An agent, because he can bind the other partners by his acts and a principal, because he himself can be bound by the acts of the other partners.
Rights of a Partner:
following are:
- Every partner has the right to share profit or losses with other partners in the agreed ratio.
- Every partner has the right to take part in the conduct of business.
- If a partner has given loan to the firm, he has a right to receive interest at agreed rate.If the rate of interest is not agreed, it is paid@ 6%p.a.
A partnership deed, also known as a partnership agreement, is a document that outlines in detail the rights and responsibilities of all parties to a business operation. It has the force of law and is designed to guide the partners in the conduct of the business. It is helpful in preventing disputes and disagreements over the role of each partner in the business and the benefits which are due to them.
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