Partnership

Accounting

Medium

Which statements are true about partnership:

(A) Each partner carrying on the business is the principal as well as the agent for all the other partners.

(B) Valid partnership can be formulated even without a written agreement between the partners.

(C) Interest on partner's loan is to be given @ 12% p.a., if the deed is silent about the rate

(D) The maximum number of partners can be 50.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(B) and (C) only

(A), (B), (C) and (D)

(B), (C) and (D) only

✅ Correct Option: 1

Looking at each statement about partnership:

Statement Analysis

Statement (A): Each partner carrying on the business is the principal as well as the agent for all the other partners.

TRUE - According to the Indian Partnership Act, 1932, every partner acts in dual capacity:

As a principal (owner of the business)
As an agent (representative) of all other partners when conducting firm's business

This is a fundamental characteristic of partnership.

Statement (B): Valid partnership can be formulated even without a written agreement between the partners.

TRUE - Partnership deed is not mandatory by law. A partnership can be formed through:

Oral agreement
Written agreement
Even implied through conduct of partners

However, a written partnership deed is recommended to avoid future disputes.

Statement (C): Interest on partner's loan is to be given @ 12% p.a., if the deed is silent about the rate

FALSE - This is incorrect. According to the Indian Partnership Act, 1932:

Interest on partner's loan (when deed is silent) = 6% p.a.
Not 12% p.a.

Note: Interest on capital is NOT given if deed is silent, but interest on loan is given @ 6% p.a.

Statement (D): The maximum number of partners can be 50.

TRUE - As per the Companies Act, 2013:

Maximum number of partners in a partnership firm = 50

Conclusion

True statements are: (A), (B) and (D) only

Correct Answer: Option 1

2026: 29 May Shift 1

Arrange the following steps in sequence, related to calculation of goodwill by capitalisation of super profits method.

(A) Calculate super profits.

(B) Multiply the super profits by the required rate of return multiplier

(C) Calculate capital of the firm, which is equal to total assets (excluding goodwill and fictitious assets) minus outside liabilities.

(D) Calculate normal profits on capital employed and average profits for past years,

Choose the correct answer from the options given below:

2026: 13 May Shift 1

Arun and Barun are partners in firm. The net divisible profit as per Profit and Loss Appropriation A/c of the firm is Rs. 7,50,000. The total interest on partner's drawing is Rs. 12,000. Arun's salary is Rs. 12,000 per quarter and Barun's salary is Rs.1,20,000 per annum. The net profit/loss earned during this year was:

2022: 23 Aug Shift 2

Calculate net profit as per P & L A/c for the year ending 31 March, 2022 from the following information :

share of profit transferred to Capital A/c's of partners :

Ram Rs. 7,000

Shyam Rs. 3,500

Interest on capital :

Ram Rs. 1,500

Shyam Rs. 500

Interest on Drawings :

Ram Rs. 300

Shyam Rs. 200

Ram's salary Rs. 1,000

2025: 15 May Shift 1

What is the amount of profit to be credited to A's Capital account?

2025: 3 June Shift 2

Which of the following account / statement is prepared to distribute the profit or loss among partners

2025: 2 June Shift 2

When the date of drawing is not specified, interest on drawings are calculated for

Solution

Statement Analysis

Conclusion

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