Accounting for partnership: Basic concept

QUESTIONS:

1. Define Partnership Deed.

Answer: A partnership deed is an agreement among the partners which contains ai! the terms of the Partnership. It generally contains the details about all the aspects affecting the relationship between the partners including the objective of business, contribution of capital by each partner-ratio in which the profits and the losses will be shared by the partners and entitlement of partners to interest on capital, interest on loan etc.

2. Why it is considered desirable to make the partnership agreement in writing?

Answer: As. per Partnership Act 1932 it is not necessary that a partnership agreement must be in writing but still it is always suggested that it should be in written form Because today there are very good relationship among the partners but n future if there may be any dispute regarding any issue, a written partnership agreement will help in avoiding disputes and misunderstandings among the partners.