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If the deed separately states rights of working and sleeping partners, what purpose does it serve?

Answer and explanation

Correct answer: Clarity about role and benefits

A working partner usually participates actively in managing the firm, whereas a sleeping or dormant partner generally contributes capital and shares results without taking part in routine management. Stating their rights separately in the deed clarifies authority, responsibilities, access to information, remuneration where agreed, and entitlement to profits or other benefits. This reduces disputes because each partner can refer to the written arrangement. Therefore, option A is correct. The clause does not make the firm tax-free, remove capital, or transfer ownership to customers; those choices have no logical connection with defining partner roles.

Related tags

Working PartnerSleeping PartnerPartner RightsPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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