Rights of partners:
- Every partner has a right to take
part in the management of the business.
- Every partner has a right to be
consulted about the affairs of the partnership business.
- Every partner has a right to
inspect the books of account and have a copy of the same.
- Every partner has a right to share
the profits or losses with others in the agreed ratio.
- If a partner has contributed a sum
in excess of the agreed capital, he has a right to receive interest on
such an excess at an agreed rate of interest. In case the rate of interest
is not agreed, he may be paid interest @ 6% per annum.
- In case of an emergency a partner
has the right to act according to his best judgement and be indemnified
for the expenses incurred by him
- A partner has the right now to
allow the admission of a new partner.
- On giving a proper notice, a
partner has the right to retire from the firm.
- If a partner incurs expense on the
business or he pays some money on behalf of the firm, that partner may get
indemnified of these payments from the firm.
v Duties (Obligations) of
Partners
- To devote time and attention to
the business of the partnership.
- To carry on the business
diligently and with the greatest common advantage.
- Not to engage in competition
against the firm. If he does so, he must account for the profits made in
the competing business.
- To hold and use the property of
the firm only for the firm.
- To act within the authority.
- To make good the loss that may
have been caused by his willful neglect or breach of trust.
v Preparation of Profit
and Loss and Loss Appropriation Account
Profit &
Loss Appropriation account is mere an extension of Profit Loss account. It is
prepared to ascertain the net distributable profit to be credited among the
partners in a partnership firm. All the entries related to interest on
partners’ capital, interest on partners’ drawings, partners’ salaries or
commission, amount transferred to reserve fund etc. should be recorded in this
account.
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