The document provides a definition of partnership according to the Indian Partnership Act of 1932, which describes it as the relationship between individuals who share profits from a jointly conducted business. Key features include the necessity of an agreement for profit-sharing, lawful business conduct, and limitations on the number of partners. Additionally, it discusses partner compensation and necessary adjustments in financial dealings, including interest on capital and profit distribution.

1. Mr.K.HARIPRASATH Assistant Professor
M.vijaya lakshmi
2nd Year B.Com (CA)

2. Definition:
According to section 4 of the Indian Partner ship
Act1932 Partnership is defined as "The relationship
between persons who have agreed to share the profits
of a business carried on by All or any of them acting
for all”. persons making an agreement to carry
business for common Purpose are called partners
individually and firm collectively. The name under
which their Business is carried on is called the firm
name.
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3. Features of partnership:
 There must be an agreement into between two or more person
 The object of the agreement must be to share the profits of a
business
 The business must be carried on by all or any of the person
concerned acting for all.
 Its is formed to carry on a lawful business.
 It is an association for two or more person.
 The number of persons constitution a partnership must not
Exceed ten ,incase of a banking business and twenty in other
business.
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4. Comparison with their fellow partner. As a result they
should be allowed a special compensation either in the
fellow of salary or not the form of commission which are
not treated as business expenses but division deed.
salary to a partner is charged to profit& loss
appropriation account and the net profit left is divided
among the partner in the agreed ratio. journal entry for
salary payable to partner will be as,
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5.  Before ascertaining the amount of profit which is divided
among the partner the following Adjustments are usually
necessary in order to adjust the mutual right of the partner.
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1.Interest on Capital:
It had already been stated above that interested on
partners caption is not allowed unless the partnership deed
so provides there must be a definite provision in the
partnership deed about it. It is nothing but a division of a
part of profit according to capital are contributed by partner

6. 6
Particulars X
Rs
Y
Rs
Z
Rs
Particulars X
Rs
Y
Rs
Z
Rs
To drawing
To interest on
Drawings
To balanced C/d
x
x
X
x
x
x
x
x
X
By balance b/d
By interest on
capital
By commission
By share of
profit
x
x
X
x
x
x
x
x
x
x
X
x

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