Partnership Act 1890 Flashcards
1
Q
When does this act come into action?
A
When there is no written partnership agreement already.
2
Q
Rule 1 (Capital)
A
Partners must contribute equal amounts of capital
3
Q
Rule 2 (Loans)
A
Any loans to the business by partners carry 5 percent interest per annum
4
Q
Rule 3 (Drawings)
A
No partner may be charged interest on drawings
5
Q
Rule 4 (Capital)
A
No partner is entitled to interest on capital
6
Q
Rule 5 (Salary)
A
Neither is entitled to a salary
7
Q
Rule 6 (Profits)
A
Profits/losses are shared equally
8
Q
Which rules are the most important when preparing partnership appropriation accounts and current accounts?
A
Rule 2 (Loans) and rule 6 (Profits).
