Welcome to the NCERT Solutions for Class 12 Accountancy - Chapter Accounting for Partnership : Basic Concepts. This page offers a step-by-step solution to the specific question from Exercise 5, Question 1:
What is meant by partnership? Explain its chief characteristics? Explain.
. With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.What is meant by partnership? Explain its chief characteristics? Explain.
Partnership is defined as “Relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all”.
The essential features of partnership are :
1. Two or More Persons: In order to form partnership, there should be at least two persons coming together for a common goal. In other words,the minimum number of partners in a firm can be two. There is however,a limit on their maximum number. By virtue of Section 464 of the Companies Act 2013, the Central Government is empowered to prescribe maximum number of partners in a firm but the number of partners cannot be more than 100. The Central government has prescribed the maximum number of partners in a firm to be 50.
2. Agreement: Partnership is the result of an agreement between two or more persons to do business and share its profits and losses. The agreement becomes the basis of relationship between the partners. It is not necessary that such agreement is in written form. An oral agreement is equally valid. But in order to avoid disputes, it is preferred that the partners have a written agreement.
3. Business: The agreement should be to carry on some business. Mere co-ownership of a property does not amount to partnership. For example, if Rohit and Sachin jointly purchase a plot of land, they become the joint owners of the property and not the partners. But if they are in the business of purchase and sale of land for the purpose of making profit, they will be called partners.
4. Mutual Agency: The business of a partnership concern may be carried on by all the partners or any of them acting for all. This statement has two important implications. First, every partner is entitled to participate in the conduct of the affairs of its business. Second, that there exists a relationship of mutual agency between all the partners. Each partner carrying on the business is the principal as well as the agent for all the other partners. He can bind other partners by his acts and also is bound by the acts of other partners with regard to business of the firm. Relationship of mutual agency is so important that one can say that there would be no partnership, if the element of mutual agency is absent.
5. Sharing of Profit: Another important element of partnership is that, the agreement between partners must be to share profits and losses of a business. Though the definition contained in the Partnership Act describes partnership as a relation between people who agree to share the profits of a business, the sharing of loss is implied.
NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:
Stay updated with our latest educational content and study tips
It’s not about starting over if you took a break to care for children, take care of yourself, be healthy or for any other reason. This is a realistic strategy for the recovery of skills, selection of the right job, and overcoming the resume problem. One year, three years or 10 years of a career … Read more
Read MoreThere’s no need to score 95% or achieve a JEE/NEET rank. You don’t need to score 95% or rank in JEE/NEET to build a solid career. A candid and pragmatic guide to the routes that actually work for students who have an average mark and what to do when faced with the options. If … Read more
Read MoreAI tools, online platforms that are much cheaper than coaching centres and the changing idea of what “structure” even means have upended this argument more in the past two years than in the decade preceding it. Here’s what is really the case for 2026 – and what has actually stayed the same. If you look … Read more
Read MoreStarting to make a new career after 30 isn’t a start from scratch. Marketing, teaching, financial, retail, healthcare, sales and other professionals can pursue careers in technology by applying the existing knowledge and skills they have acquired to new technology skills. There are various ways to enter the technology industry, such as in IT support, … Read more
Read MoreCalculate percentage from obtained marks and total marks.
Welcome to the NCERT Solutions for Class 12 Accountancy - Chapter . This page offers a step-by-step solution to the specific question from Excercise 5 , Question 1: What is meant by partnership? Explain its chief characteristics? Explain.....
Fresh educational articles and updates.
Most-read articles from SaralStudy.
Fast access to frequently used study resources.
Recently viewed articles based on SaralStudy activity.
Add Comment