Partnership Deed

The deed may fix a special ratio for bearing deficiency. In that case the written clause is more important than the general rule.

A personal loan taken despite the deed restriction may not be a valid firm liability. It should be examined against the concerned partner.

Purchase of a major asset affects firm capital and risk. Therefore unanimity may be required under such a clause.

Even if goodwill is not shown in books the premium may be given to old partners. The basis is sacrificing ratio.

An amendment changes only the clause it addresses. The old salary clause continues unless it is changed.

A debit capital balance shows deficiency in capital. As per deed amount should be recovered or adjusted through current account.

Under fixed capital regular adjustments go to current account. Posting drawings to capital account will disturb fixed capital.

Under fluctuating capital profit salary interest and drawings go to capital accounts. A separate current account is not necessary.

The governing concept is that interest on drawings depends on both the amount withdrawn and the time for which each amount was used. With unequal drawings, the exact dates or a stated timing assumption are needed to calculate a precise amount. If the question gives no dates and does not indicate a convention, the safest examination approach is to state the accepted assumption clearly before applying it; an average-period rule should not be imposed silently. Option A is therefore the best answer. Always assuming six months may be wrong, zero interest ignores the deed, and capital ratio has no necessary connection with the timing of drawings.

A partner causing loss by breaching the deed may be held responsible. His account may be debited.

If the signature condition is not met validity of the expense may be disputed. If unauthorized recovery from A may be possible.

The condition of available profit limits salary. If profit is low payment is made according to deed order or proportion.

Payment of a partner's personal income tax by the firm is not a business expense of the firm; it is treated as a withdrawal (drawings) by that partner. Therefore B's drawings/current account is debited and Bank/Cash is credited. Option B (Income Tax Expense Account) is incorrect because that would be used only if the tax were a firm expense. Exam tip: always check the deed—if an outlay is a partner's personal expense, record it as drawings (entry: B's Current A/c Dr. To Bank A/c).

The clause mandates that any change in the deed must be evidenced by a written amendment. Therefore accounting adjustments (e.g., changes in profit sharing, interest on capital, partner liabilities) will be recorded only when a written amendment to the deed exists. Oral agreements will not be treated as valid evidence for changing accounts. Option B is incorrect because it contradicts the clause by treating oral agreements as acceptable evidence. Options C and D are incorrect because they assert automatic effects; changes like profit equalisation or stopping interest occur only if the deed is amended in writing, not automatically. Exam tip: when answering such questions, look for phrases like “written amendment” or “no oral modification” in the deed — they determine whether accounting entries can be altered.