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Why is the rule for operating the partnership's bank account included in the partnership deed?

Answer and explanation

Correct answer: To decide who will have signing authority

The deed specifies bank account operation to make clear who may sign and under what conditions, ensuring proper control of payments and avoiding disputes or unauthorized transactions. Choice A is correct because it defines signing authority. Option B is wrong — a bank is not made a partner by such a clause. Options C and D describe unrelated outcomes (withholding profits or converting loans) and are not purposes of an account‑operation clause. Exam tip: look for terms like 'authorized signatories', 'approval limits' and 'mode of operation' in the deed question.

Related tags

Partnership AccountsPartnership DeedBank AccountSigning AuthorityPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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