Q 1) Define Partnership. State the main provisions of the Partnership Act relating to partnership accounts in the absence of partnership deed. (Marks 3)
Ans. 1) Partnership :
The relationship between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. In the absence of the partnership deed, the following provisions are applicable :
(i) No interest is payable on the capital to the partners.
(ii) No interest is charged on partners drawings.
(iii) 6% p.a. interest is charged on loan advanced by a partner to the firm.
(iv) Profits are to be shared equally by all partners.
(v) No salary is payable to any partner for any extra time devoted by him for the business.
Q2) A and B are partners sharing profits in the ratio of 3 : 2 with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. B is to be allowed an annual salary of Rs. 2,500. During 1995, the profits of the year prior to calculation of interest on capital but after charging B’s salary amounted to Rs. 12,500. A provision of 5% of the profits is to be made in respect of manager’s commission.
Prepare an account showing the allocation of profits and partner’s capital account. (Marks 5)
Q 3) A and B are partners sharing profits in the ratio of 3 : 2. C is admitted as a partner. The new profit – sharing ratio among A, B and C is 4 : 3 : 2. Find out the sacrificing ratio.
Ans. 3) A’s sacrifice = A’s old share – A’s new share
= 3/5 – 4/9
B’s sacrifice = B’s old share – B’s new share
= 2/5 – 3/9
Thus, the sacrificing ratio of A and B :
A : B
7 : 3