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Chapter: 12th Accountancy : Accounts of Partnership Firms Fundamentals

Accounts of Partnership Firms Fundamentals | Accountancy | Study Material, Lecturing Notes, Assignment, Reference, Wiki description explanation, brief detail |

Meaning, definition and features of partnership

When two or more persons join together to form a business to share the profit or loss arising therefrom in an agreed ratio, the relationship among them is called partnership.

Meaning, definition and features of partnership

 

1. Meaning and definition of partnership

When two or more persons join together to form a business to share the profit or loss arising therefrom in an agreed ratio, the relationship among them is called partnership. The business may be carried on by all or any of them acting for all.

According to Section 4 of the Indian Partnership Act, 1932, partnership is defined 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”.

 

2. Features of partnership

Following are the essential features of partnership:

·        Partnership is an association of two or more persons. The maximum number of partners is limited to 50.

·        There should be an agreement among the persons to share the profit or loss of the business. The agreement may be oral or written or implied.

·        The agreement must be to carry on a business and to share the profits of the business.

·        The business may be carried on by all the partners or any of them acting for all.

 

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Study Material, Lecturing Notes, Assignment, Reference, Wiki description explanation, brief detail


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