Mention any four provisions of the partnership act, in the absence of partnership deed.
Answers
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there are four provisions under partnership act are:-
1. profit and loss divided equally.
2..No, interest charged on drawing.
3.NoT any interest charged on capital in partnership deed.
4..interest 6% per annum to be allowed a partners loan to the firm.
Provisions of the partnership act, in the absence of a partnership deed, are as follows :
Matter → Provision as per Partnership Act
1. Profit Sharing Ratio → 1. Equal profit/loss of each partner
2. Interest on Capital → 2. No interest on capital
3. Interest on Drawings → 3. No interest on drawings
4. Interest on Advances/Loans by a Partner → 4. Interest @ 6% per annum
5. Remuneration to a Partner → 5. No remuneration (salary/commission) is payable to a partner
Explanation:
Provisions of Partnership Act in the absence of Partnership Deed:
Suppose a partnership firm does not have Partnership Deed. In that case, provisions of the Indian Partnership Act, 1932 are applied to essential matters of partnership firm in the manner given above.
What is Partnership Deed?
- A partnership is the result of an agreement.
- The agreement among the partners which sets out the terms on which they have agreed to form a partnership is called the partnership agreement/deed.
What are the Contents of the Partnership Deed?
1. Name and address of the firm.
2. Date of commencement of business and its duration.
3. Nature and place of business.
4. Capital of each partner.
5. Right of each partner's drawings and rate of interest on drawings, if any, and rights and duties of partners.
6. Rate of interest on capital and loan to be allowed.
7. Method/ratio in which profits and losses are to be shared.
8. Valuation of goodwill at the time of admission, the retirement of a partner, and at the time of dissolution of the firm.
9. Method of settling disputes among the partners.
10. Method of retirement of a partner and method of payment of his share.
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