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Why is a partnership deed prepared?

Answer and explanation

Correct answer: To reduce disputes

A partnership deed is a written agreement among the partners. It records important rules such as the profit-sharing ratio, capital contributions, drawings, interest, salaries, commissions, duties, and procedures for resolving disagreements. When these matters are written clearly, each partner knows the agreed rights and responsibilities. This reduces misunderstanding and makes the management of the firm more orderly.

Therefore, the main purpose among the given choices is to reduce disputes, so option A is correct. Stopping sales, hiding cash, or removing customers is not the purpose of a partnership deed. The deed does not prevent normal business activity; instead, it provides a common set of rules for conducting that activity fairly and consistently.

Related tags

Partnership DeedDispute PreventionExam Mcq

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