Accounting for partnership firms – fundamentals

What is accounts payable

Amounts companies owe suppliers for goods and services. Listed in the current liabilities section on...

What is annual report

A report a company publishes for its stockholders at the end of each fiscal year. The report include...

What is an auditor

A firm of certified public accountants a company hires as an independent third party to review its ...

What is a balance sheet

A financial statement that reports a company’s assets and the claims against them — liabilities and...

Which act limits the maximum number of partners in a firm

The Companies Act, 1956 limits the maximum number of partners in a firm.

Which Act’s provisions are applied in the absence of partnership deed

The provisions contained under The Indian Partnership Act, 1932 are applied in the absence of partne...

Mr Sohan Lal and Mr. Mohan Lal are partners in a firm. Mr. Sohan Lal suggests the admission of his friend Mr. Madan Lal but Mr. Mohan Lal does not agree to the same. Can Mr. Madan Lal be admitted in the firm

No, Mr. Madan Lal cannot be admitted in the firm. The reason being that every partner has a right no...

Rekha, Ritu and Reena are partners in a partnership firm involved in the business of saree manufacturing. Ritu incurs an expense of Rs.10,000 for the repairs of a machinery and wants the firm to reimburse the amount to her. State whether Ritu is eligible

Yes, Ritu is entitled to get the amount. The reason being that a partner has a right to be indemnifi...

L,M and N are partners in a firm. M used Rs.10,000 belonging to the firm and suffered a loss of Rs.1,000. He wants the firm to bear the loss. State whether M is correct or not.

No, M is not correct. M must pay Rs.11,000 to the firm. The reason being that where a partner uses t...

T,R and G are partners in a firm. R used Rs. 10,000 belonging to the firm and made a profit of Rs. 1,000. T and G want the amount to be given to the fir

Yes, T and G are correct. R must pay Rs.11,000 to the firm. The reason being that as per the provisi...

Red, Blue and Yellow are partners in a firm without any partnership deed. Red and Yellow want to purchase goods from Green Ltd. but Blue does not agree. Can the goods be purchased or not

Yes, the goods can be purchased. The reason being that as per the provisions of Indian Partnership A...

There are 10 partners in a partnership firm carrying on a banking business. Mr. Ramesh, one of the partners, suggests the admission of his friend Mahesh to which all the partners have agreed. You are required to advise on the admission of Mr. Mahesh

No, Mr. Mahesh cannot be admitted to the firm in spite of the consent of all the partners. The reaso...

There are 20 partners in a partnership firm carrying on a retail business of readymade garments. Mr. Parekh, one of the partners, suggests the admission of his friend Farooq to which all the partners have agreed. You are required to advise on the admissio

No, Mr. Farooq cannot be admitted to the firm. The reason being that The Companies Act, 1956 limits ...

What is a partnerhip at will

Partnership at will refers to the partnership where the partnership agreement between/among the part...

Does the principal agent relationship among the partners hold good for all the acts in a firm

No, all the acts of a partner do not bind the firm. As per the provisions of Indian Partnership Act,...

Where will you record the drawings made out of capital if the partners’ capitals are fixed

If the partner’s capitals are fixed, drawings made out of capital are recorded on the debit side of ...

Where will you record the Loss-share of a partner if the partners’ capitals are fluctuating

If the partner’s capitals are fluctuating, loss-share of a partner is recorded on the debit side of ...

For how many months is the interest on total drawings calculated at the given rate of interest provided that a fixed amount is withdrawn in the beginning of each month

When drawings of a fixed amount are made in the beginning of each month whole of the accounting peri...

What is the rate of interest applicable on drawings of fixed amount made by the partner at the end of each quarter in the absence of a partnership deed

As per the provisions of Indian partnership Act, 1932, interest on partner’s drawings is not chargea...