Partnership :
Introduction : Meaning
Indian partnership act defines
partnership as “Partnership is the relation between persons who have agreed
to share the profit and loss of business carried on by all or any of them
acting for all.”
partnership as “Partnership is the relation between persons who have agreed
to share the profit and loss of business carried on by all or any of them
acting for all.”
A partnership is a form of
business in which two or more but not
more than twenty people own a business, it is based on a written contract or on
an oral agreement.
business in which two or more but not
more than twenty people own a business, it is based on a written contract or on
an oral agreement.
Partnership is the relation
between a person who has agreed to share the profit of a business carried on by
all or any of them acting for all, persons who have entered into a partnership
with one another are called individual ‘partner’ and collectively a ‘firm’.
between a person who has agreed to share the profit of a business carried on by
all or any of them acting for all, persons who have entered into a partnership
with one another are called individual ‘partner’ and collectively a ‘firm’.
Some important point :
Related to partnership
Related to partnership
- Partnership deed – It
contains all terms of the agreement. It is also known as articles of partnership - Sacrifice ratio = old ratio – new ratio.
- Goodwill = good name, a reputation earned by hard work & honesty
- Gaining ratio = new ratio- old ratio.
- When a partner
retire or dies then we calculate gaining ratio. - On the
admission of a partner we calculate sacrifice ratio. - Dissolution
of partnership means that the firm closes down its business and comes to an
end. - On
dissolution assets of the firm are sold and liabilities are paid off and out of the remaining amount, the accounts of partners are settled. - Realization
a/c is opened for disposing of all the assets of the firm & making payment
to all the creditors. - Revaluation
a/c is prepared at the time of admission, death, and retirement. - Realization a/c is prepared at the time of dissolution of a company.
Types of Partners
1. Sleeping or dormant
partner :
The sleeping partners who are not actively taking part in the
management and administrative activity of the business.
management and administrative activity of the business.
2. Active partner
:
The
active partner those partners who actively
take part in the management and administrative activity of the business.
active partner those partners who actively
take part in the management and administrative activity of the business.
3. Limited partner :
A limited partner is a partner whose liability is limited to the amount that he
paid to the business.
paid to the business.
4. Nominal partner :
A
nominal partner is a person who has permitted others to the belief that he is
partner. he does not invest capital but he gives a chance of using “GOODWILL”
of him.
nominal partner is a person who has permitted others to the belief that he is
partner. he does not invest capital but he gives a chance of using “GOODWILL”
of him.
5. Quasi partner :
A
quasi partner is a partner who has
withdrawal his capital but keep it as a loan to the business. He will get
interest on his loan.
quasi partner is a partner who has
withdrawal his capital but keep it as a loan to the business. He will get
interest on his loan.
6. Partner by estoppel
:
partner by estoppels is not a partner of the firm but his words and conduct he
leads the outsiders to believe that he is also a partner of the firm. Usually this
arises, when the outgoing partner fails to give
notice about his retirement.
leads the outsiders to believe that he is also a partner of the firm. Usually this
arises, when the outgoing partner fails to give
notice about his retirement.
7. Partner in profit
only :
Is one who gets a share of the profits and does not share losses. He is liable
to outsiders. He does not take part in the management of the business.
to outsiders. He does not take part in the management of the business.
8. Limited partner :
in
foreign countries like the U.S. the law of the land permits the admission of
partners with limited liability. But in India, no one can be a limited partner. There
is only one exception. The liability of a minor admitted for the benefits of
partnership is limited to the extent of his capital contribution.
foreign countries like the U.S. the law of the land permits the admission of
partners with limited liability. But in India, no one can be a limited partner. There
is only one exception. The liability of a minor admitted for the benefits of
partnership is limited to the extent of his capital contribution.
9. Secret partner :
A
secret partner is actually a partner of
the firm. But he does not hold out to the public as a partner of the firm but
keeps his existence as secret. His liability is also unlimited.
secret partner is actually a partner of
the firm. But he does not hold out to the public as a partner of the firm but
keeps his existence as secret. His liability is also unlimited.
10. Sub- partner :
Is one who gets a share of profits of the
firm from one of the partners. A sub-partner has no rights against the firm and
he is not liable for its debts.
firm from one of the partners. A sub-partner has no rights against the firm and
he is not liable for its debts.
11.Incoming partner :
Incoming partner is one who is newly admitted
to the firm, is not liable for the debts and obligations of the firm incurred
before his joining the firm unless he so agrees.
to the firm, is not liable for the debts and obligations of the firm incurred
before his joining the firm unless he so agrees.