Learn Class XI-XII Tuition (PUC) with Free Lessons & Tips

QUESTIONS:

1. Define Partnership Deed.

Answer: A partnership deed is an agreement among the partners which contains ai! the terms of the Partnership. It generally contains the details about all the aspects affecting the relationship between the partners including the objective of business, contribution of capital by each partner-ratio in which the profits and the losses will be shared by the partners and entitlement of partners to interest on capital, interest on loan etc.

2. Why it is considered desirable to make the partnership agreement in writing?

Answer: As. per Partnership Act 1932 it is not necessary that a partnership agreement must be in writing but still it is always suggested that it should be in written form Because today there are very good relationship among the partners but n future if there may be any dispute regarding any issue, a written partnership agreement will help in avoiding disputes and misunderstandings among the partners.

The conservatism concept is a concept in accounting which refers to the idea that expenses and liabilities should be recognised as soon as possible in a situation where there is uncertainty about the possible outcome and in contrast record assets and revenues only when they are assured to be received.

ROI = EBIT/ Capital Employed
EBIT = ROI × Capital Employed
= 25% × 20,00,000
= 5,00,000

Intrest = 20,00,000 × 15%
= 3,00,000

Shareholders Gain = EAT ( Earning After Tax)
= (EBIT - Intrest) - Income Tax
= (5,00,000 - 3,00,000) - 60%
= 2,00,000 - 60%
= 2,00,000 - 120,000
= 80,000
Hence, the gain the shareholders due to the loan raised by the company is RS. 80,000.