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Why is the nature (object) of the business written in the partnership deed?

Answer and explanation

Correct answer: To state the work for which the firm is formed

The nature (object) of business is written to make the firm's purpose and the scope of its activities clear. This clause in the partnership deed defines what the firm may lawfully carry out, helps prevent disputes between partners, and provides transparency to outsiders such as banks and tax authorities. Options B, C and D are not valid reasons: B (hiding a partner's age) and D (hiding cash sales) are irrelevant/illegal motives, and C (stopping bank interest) is unrelated — a deed cannot prevent bank interest. Exam tip: remember the 'object clause' in the deed indicates permitted business activities and limits, so read that clause when answering related questions.

Related tags

Partnership DeedPartnership AccountsNature Of BusinessObject ClausePartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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