Partnership

Accounting

Medium

common

Which among the following is NOT true?

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

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

Mere co-ownership of a property can amount to partnership.

Persons who have entered into partnership with one another are individually called 'partners' and collectively called 'firm'.

✅ Correct Option: 3

According to the Indian Partnership Act, 1932, mere co-ownership of a property does NOT constitute a partnership. This is the statement that is NOT true.

For a partnership to exist, there must be:

An agreement between two or more persons
Agreement to carry on a business
Agreement to share profits of that business

Co-ownership simply means joint ownership of property. The co-owners may share income from the property (like rent), but this doesn't make them partners unless they are actively carrying on a business together with the intention to share profits.

For example: If two people jointly own a building and rent it out, they are merely co-owners sharing rental income. However, if they start a real estate business together buying, selling, and managing properties with shared profits, then it becomes a partnership.

The other statements are all correct:

Option 1 is true because partnership can be formed through oral or written agreement. No registration or written partnership deed is mandatory for a valid partnership.

Option 2 is true as it reflects the concept of mutual agency in partnership - each partner represents the firm and other partners in business dealings while also being a principal in their own right.

Option 4 is true as per the basic definitions provided in Section 4 of the Partnership Act, 1932.

2025: 15 May Shift 1

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

2026: 11 May Shift 2

Accounting treatment for partnership firm is similar to that of a sole proprietorship business with the exception of the following aspects:

A. The preparation of financial statements

B. Maintenance of Partners' Capital Accounts

C. Adjustments for Wrong Appropriation of Profits in the Past

D. Distribution of Profit and Loss among the partners

Choose the correct answer from the options given below:

2026: 23 May Shift 2

When partners' capital account is prepared under the fluctuating capital method, interest on drawings is shown under:

2025: 14 May Shift 2

Which combination of statements is true about partnership-

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

(B) Methods of settlement of disputes among the partners can't be part of the partnership deed.

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

Choose the correct answer from the options given below:

2025: 29 May Shift 2

Which of the following are shown under capital account in case capital of partner's are fixed?

(A) Fresh capital introduced

(B) Permanent capital withdrawn

(D) Amount of capital brought down from the previous year

Choose the correct answer from the options given below:

2026: 24 May Shift 1

Profit and Loss Appropriation Account has the following features:

(A) It is merely an extension of the Profit and Loss Account of the firm.

(B) It shows how the profits are appropriated or distributed among the partners.

(D) All adjustments in respect of partner's salary, partner's commission, interest on capital, interest on drawings, etc. are made through this account.

Choose the correct answer from the options given below:

Which among the following is NOT true?

Solution

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