You must complete Manufacturing Account to unlock this Lesson.

CONTENTS:

  1. Meaning of partnership
  2. Partnership agreement
  3. Accounting entries

 

DEFINITION OF PARTNERSHIP

The partnership Act of 1890 defined partnership as ‘the relation which exists between persons carrying on a business in common with a view of profit’.

Partnership can be formed by two to twenty persons. The owners of partnership business are called partners.

Partnership Agreement

This refers to rules and regulations put in place by the partners for smooth operation of the partnership business. The guiding rules will be contained in a written agreement known as partnership deed. The agreement must be signed by the partners in the presence of a lawyer.

CONTENTS OF PARTNERSHIP AGREEMENT

  1. The capital to be contributed by each partner.
  2. The rate of interest on capital.
  3. The rate of interest on drawings.
  4. The division of profits and losses.
  5. Partners’ salaries, commissions and other remunerations.
  6. Valuation of goodwill on the death or retirement of a partner.

Lesson tags: Financial Accounting Lesson Notes, Financial Accounting Objective Questions, SS2 Financial Accounting, SS2 Financial Accounting Evaluation Questions, SS2 Financial Accounting Evaluation Questions First Term, SS2 Financial Accounting First Term, SS2 Financial Accounting Objective Questions, SS2 Financial Accounting Objective Questions First Term
Back to: Financial Accounting – SS2 > First Term
© [2022] Spidaworks Digital - All rights reserved.
error: Alert: Content is protected !!