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In the absence of specific provisions in the Partnership Deed, every partner is bound to contribute in ________ to the losses of the firm:
- a)Equally
- b)Profit Sharing Ratio
- c)Capital Ratio
- d)Any of the above manner
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
In the absence of specific provisions in the Partnership Deed, every p...
RULES APPLICABLE IN THE ABSENCE OF PARTNERSHIP DEED
As we know from the previous discusion that it is not cumpulsory to have a partnership deed for a partnership firm. Hence if a firm is not having any written agreement or a partnership deed or if partnership deed is there but it is silent on certain issues the following provisions of the Indian Partnership Act 1932 will be applicable.
1. Profit sharing Ratio : Profits and losses would be shared equally among partners.
Community Answer
In the absence of specific provisions in the Partnership Deed, every p...
Partnership Deed and Loss Sharing in Partnership
Partnership Deed:
A Partnership Deed is a legal document that outlines the terms and conditions of a partnership agreement. It contains the rights and responsibilities of each partner, the profit-sharing ratio, capital contribution by each partner, the duration of the partnership, and other important aspects of the partnership.
Contributing to Losses:
In the absence of specific provisions in the Partnership Deed, every partner is bound to contribute to the losses of the firm. The share of each partner in the losses of the firm is determined by the profit-sharing ratio mentioned in the Partnership Deed.
Profit Sharing Ratio:
The profit-sharing ratio is the ratio in which the partners share the profits of the firm. It is usually mentioned in the Partnership Deed. If the Partnership Deed is silent on the profit-sharing ratio, then the partners share the profits equally.
Capital Ratio:
The capital ratio is the ratio in which the partners have contributed capital to the firm. It is usually mentioned in the Partnership Deed. If the Partnership Deed is silent on the capital ratio, then the partners are assumed to have contributed capital in equal proportions.
Conclusion:
In conclusion, if there are no specific provisions in the Partnership Deed regarding loss sharing, then every partner is bound to contribute to the losses of the firm in the ratio of their profit-sharing ratio. Therefore, option 'B' is the correct answer.
Partnership Deed:
A Partnership Deed is a legal document that outlines the terms and conditions of a partnership agreement. It contains the rights and responsibilities of each partner, the profit-sharing ratio, capital contribution by each partner, the duration of the partnership, and other important aspects of the partnership.
Contributing to Losses:
In the absence of specific provisions in the Partnership Deed, every partner is bound to contribute to the losses of the firm. The share of each partner in the losses of the firm is determined by the profit-sharing ratio mentioned in the Partnership Deed.
Profit Sharing Ratio:
The profit-sharing ratio is the ratio in which the partners share the profits of the firm. It is usually mentioned in the Partnership Deed. If the Partnership Deed is silent on the profit-sharing ratio, then the partners share the profits equally.
Capital Ratio:
The capital ratio is the ratio in which the partners have contributed capital to the firm. It is usually mentioned in the Partnership Deed. If the Partnership Deed is silent on the capital ratio, then the partners are assumed to have contributed capital in equal proportions.
Conclusion:
In conclusion, if there are no specific provisions in the Partnership Deed regarding loss sharing, then every partner is bound to contribute to the losses of the firm in the ratio of their profit-sharing ratio. Therefore, option 'B' is the correct answer.
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In the absence of specific provisions in the Partnership Deed, every partner is bound to contribute in ________ to the losses of the firm:a)Equallyb)Profit Sharing Ratioc)Capital Ratiod)Any of the above mannerCorrect answer is option 'B'. Can you explain this answer?
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