Meaning & Definition of Partnership

 Meaning: Partnership is an association between two or more persons

who agree to do business and share its profit & losses.
 Definition: “Partnership is the relation between persons who agreed to
share profits of a business carried on by all or any of them acting for all.”
(Section 4 of the IPA, 1932)

Nature of Partnership
 Accounting Viewpoint: Partnership is separate business entity from its
partner’s.
 Legal View Point: Partnership is not separate business entity from its
partner’s. (It means legally partners and business are not separate from
one another and in case of firm is bankrupt, private estates of partners
become liable to meet the deficit)

Essential Features of Partnership

 Two or more persons
 Agreement
 Lawful business
 Profit Sharing
 Business can be carried on by all or Any of the Partners Acting for All.

Rights of Partner's
 To participate in the management of Business
 To be consulted about the affairs of business
 To inspect the books of accounts & have a copy of it
 To share profit & losses in the agreed ratio.
 To receive interest on loan at an agreed rate of interest.
 To act according to his best judgement & be indemnified for the
expenses incurred by him.
 Not to allow admission of new partner
 After giving proper notice, partner has right to retire from the firm
 If a partner incurs expenses on the business or he pays some money on
behalf of the firm, that partner may get indemnified against these
payments from the firm.