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Why is a clause about operation of the bank account useful in a partnership deed?

Answer and explanation

Correct answer: To specify who is authorized to sign cheques/drafts and how banking transactions will be conducted

A bank‑operation clause specifies who may operate the firm's bank account — who can sign cheques/drafts, how many signatures are required, procedure for deposits/withdrawals, and how the account is opened or closed. This prevents misuse and disputes over authority. Option C (borrowing/overdraft authority) is related but usually dealt with in a separate clause about borrowing powers, so it is not the primary purpose of the bank‑operation clause. Exam tip: look for terms like 'signatory', 'mode of operation' or 'joint/individual signing' to identify this clause in a deed.

Related tags

Partnership DeedBank AccountSignatoriesPartnership AccountsFinancial ControlPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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