Question

Mohan and Radha want to start a shop to sell Rajasthani Sweets. They did not know how to enter into the agreement. Therefore, they approached a Chartered Accountant who advised them to prepare a document which may stipulate the terms and consolidation of the agreement. Name the document about which the chartered accountant advised Mohan and Radha. Also state any four important items they should include in the agreement besides the name, nature and place of business.

Answer 1

Partnership Deed;

Contents of the deed:

1. Amount of capital to be contributed by each partner.

2. Profit sharing ratio between the partners.

3. Loans and advances from the partners and the rate of interest thereon.

4. Drawings allowed to the partners and the rate of interest thereon.

5. Amount of salary and commission, if any, payable to the partners.

6. Duties, powers and obligations of partners.

7. Maintenance of accounts and arrangement for their audit.

8. Mode of valuation of goodwill in the event of admission, retirement and ***** of a partner.

9. Settlement of accounts in the case of dissolution of the firm.

10. Arbitration of case of disputes among the partners.

11. Arrangements in case a partner becomes insolvent.