According to the Section 4 of the Indian Partnership Act, 1932, partnership is an agreement between two or more persons who have agreed to share profits or losses of a business that will be carried by all or any one of them acting for all. The persons who joined their hands to set up the partnership business individually are known as ‘Partners’ and all the partners in the partnership business collectively known as ‘Firm’. The name under which the partners decided to carry out their business is known as ‘Firm Name’. Partnership is a separate business entity. It implies that a partnership firm is different from its partners. Any action taken by the partnership firm does not bind its partners. Also any action taken by the partners does not bind the partnership firm. But from the legal point of view, partnership firm is not treated as a separate business entity from its partners. It is same in the eyes of law.
Provisions of the Indian Partnership Act, 1932
Sec. 30: A minor may be admitted for the benefit of partnership if agreed upon by all the partners.
Sec. 31: If all partners agree or the express agreement among the partners permit, a person can be admitted as a partner to the firm.
Sec. 32: If all partners agree or the express agreement among the partners permit, a person may retire from the firm.
Sec. 69: It is optional to register the firm
Sec. 35: A firm is dissolved on the death of the firm unless otherwise agreed by the partners in the Partnership Deed.
Note:Â The above provisions will apply when Partnership Deed does not exist or where it exists it does not have a clause to this effect.
Also, Read
Balance Sheet
The balance sheet is the last financial statement that is prepared by any organization. This statement helps to ascertain the true financial position of an enterprise at the end of an accounting period
Profit and Loss Account
A profit and Loss Account is the second financial statement prepared by an organization. This account is prepared to ascertain the net results of a firm in form of net profit earned or net loss incurred during an accounting period.
Accounting Software
Accounting software is an integral part of the computerized accounting system. The accounting software should be selected after considering the level of skill and proficiency of the accounting professionals.
What are Accounting Reports?
Accounting Reports: When the collected data is processed and manipulated in a useful sense that can be understood by the users without any ambiguity, then it becomes information.
Transaction Processing System
Transaction Processing System (TPS) refers to a computerized system that records, processes, validates, and stores routine transactions that occur in various functional areas of a business on daily basis.