Introduction to Partnership Accounting

Bookmark added to your notes.
View Notes

Partnership Accounting

Most students need to know all about the introduction to partnership accounting which is a part of their syllabus in order to score good marks in the exams. These notes here are going to help them do that. A partnership can be defined as the time when two or more parties come together in order to run a particular business for the purpose of earning some profit. These people or partners would have a share of the profits and that too in a particular ratio which is decided beforehand. In that case, the business might require some sort of special treatment of accounting. These are some things that students will get to know in the Partnership Final Accounts Introduction.

What Exactly is a Partnership?

There are many cases where businesses with a single proprietor often tend to face some sort of issues such as lesser access to some resources or limited capital. In such cases, most people tend to enter into certain partnerships so as to overcome the challenges of the business. These partnerships would allow the people to collectively share all the resources that they have and it further helps in the expansion of a business too. So, we are going to discuss all the final accounts of partnerships firm introductions right now.

Some Features of the Partnerships

A Few Features Of Partnerships in the introduction to partnership Class 12 chapter, there are some features that students will come across. Here are some of the features that have been explained in detail for proper understanding.

  1. Agreement

In order for the partnership to function in a proper way, there must be some sort of agreement between the parties or the partners. This includes the sharing of profits and working collectively. The partners are responsible for drawing such agreements in writing or orally. The basic function of the agreement is to ensure that all the partners are familiar with their own status and functions.

  1. Business

One of the most important features of a particular partnership would have to be the business. According to the Partnership Act, it is not possible to have an agreement in case the partners carry out functions as charitable activities. Businesses could be professions, trades, or some sort of occupations.

  1. Profit Sharing

Another main aspect that students will get to learn in the Introduction to Partnership Final Accounts is the term profit sharing. It is important that the partners have a share of the profits that are produced by the firm. In case there is someone working for the company and not having a share of profits, he/she may be called an employee.

  1. Principal-Agency Relationship

In the Chapter 1 Partnership Class 12 notes, there is a mention of the term principal agency relationship. In this case, the business of the partnership might be conducted by either all the partners or just one partner who is working on behalf of all the others. This is known as the Principal Agency. Students really need to gather more information on these topics in order to have as much idea as they can about the chapter. This might really help them out in the exams.

What is a Partnership Deed?

In order to understand more about the introduction on Partnership Final Accounts, Students need to know what a partnership deed is. Partners are most free to determine all the terms that their relationships will have in the partnership. This can be done on the basis of an oral or a written agreement. In case the agreement is made in a written format, this is known as the partnership deed. These partnership deeds are pretty simple to understand. The agreement that the firm partners would make would further fill up the partnership deed.

FAQ (Frequently Asked Questions)

1. What is a Partnership?

Ans. A partnership can be defined as a phenomenon when two people or more than one people make an agreement together to run a particular company and share the profits which are made by the company? You can get more details in the Introduction to Partnership Accounting notes.

2. What does the Term Partnership Deed Mean?

Ans. It is known to us that some companies have more than one partner. These partners would make a certain agreement which would decide the sharing of profits and their status. The agreement can be written or made orally. If the agreement is created in a written format, it becomes a partnership deed. Students can find more information in the partnership final accounts introduction notes.

3. Is it Important for Partners to Share Profit in a Partnership?

Ans. Yes, it is essential that all the partners have some shares of the profits which are made by the firm. If there are some people who don’t get a share of the profits, then they will be considered as employees of the firm.

We hope that these notes to final accounts of Partnership firm introduction are able to help you out in the examinations. These notes are extremely detailed and a simple revision will definitely help the students out a lot when it comes to preparations for the class 12 exams. Have a look at these notes and get good marks.