Test: Fundamentals Of Partnership And Goodwill - 1 - Commerce MCQ

Section 4 of the Indian Partnership Act, 1932 defines partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Partners are entitled to interest on capital only if rate of interest is mentioned in the partnership deed. But in this case business is continued without partnership deed. As per the Partnership Act, 1932, partners are enttiled to interest on capital only when there is partnership deed and rate of interest is mentioned in it.

When there is no partnership deed or partnership deed is prepared but it is silent on profit sharing ratio, in such a case rules of Partnership Act, 1932 will be applicable. According to which, profits or losses will be shared by the partners equally irrespective of their capitals.

A person who joins a partnership business, individually called a partner. The group of partners is called Firm and the name under which all business activities going on is known as firm’s name.

Partnership deed plays important role in regulating the duties and responsibilities of each partner. A written partnership deed is useful to resolve disputes and misunderstanding among partners because every thing is in written form.

Interest on bank loan will be fixed by the bank and not by the partners or partnership deed. A partnership deed can show only those contents which are concerned with partners or firm. Interest on bank loan is a charge against the profit. It means it will be paid in all conditions whether there is profit or loss in the business.

The beginning of partnership is always because of an agreement. There should be an agreement among the partners to start a partnership business. Agreement can be written or oral that does not matter.

Registration of a partnership firm is optional. It means there is no need for the registration of a partnership firm. As per the Partnership Act, 1932, it is an option for a partnership firm to get registered or not. But it is always advisable to get registered.

A person who joins a partnership business, individually called a partner. The group of partners is called Firm and the name under which all business activities going on is known as firm’s name

In India, Partnership Act, 1932 is followed by all the partnership firms. Specially in the absence of partnership deed, all provisions of Partnership Act, 1932 will be applicable.