CBSE Class 12 Accountancy Accounting For Partnership Firms Fundamentals Notes

CBSE Class 12 Accounting for Partnership Firms Fundamentals. Learning the important concepts is very important for every student to get better marks in examinations. The concepts should be clear which will help in faster learning. The attached concepts made as per NCERT and CBSE pattern will help the student to understand the chapter and score better marks in the examinations.

Accounting for Partnership Firms


According to Section4 of the Indian Partnership Act, 1932 :

"Partnership is the relationship between persons who have agreed to the share the profits of a business carried on by all or any one of them acting for all"

Features of Partnership

1. There must be at least two persons to form a valid partnership. Section 11 of the Indian Partnership Act, 1932 restrict the (maximum) number of partners to 10 for carrying on banking business and 20 for other kind of business.

2. Partnership comes into existence by an agreement (either written or oral) among the partners. The written agreement among teh partners is called Partnership Deed.

3. A Partnership can formed for the purpose of carrying at sharing the profits or losses of the business

4. An agreement between the partners must be aimed at sharing the profits or losses of the business.

5. A partnership can be carried on by all or any one of them acting for all. PARTNERSHIP DEED

The partnership deed is a written agreement among the partners which contains the terms of agreement. A partnership deed should contain the following points:

1. Name and address of the firm.

2. Name and addresses of the partners.

3. Nature of the business

4. Terms of Partnership

5. Capital contribution by each partner.

6. Interest on capital

7. Drawings and interest on drawings.

8. Profit sharing ratio

9. Interest on loan.

10. Partner's Salary/commission etc.

11. Method for valuation of goodwill

6 Accountancy&XII

12. Accounting period of the firm

13. Rights and duties of partners.

Benefits of Partnership deed

(1) Helps to avoid dispute in future

(2) It is an evidence in the court 

(3) Facilitates functioning of business by avoiding misunderstanding


A Profit and Loss Appropriation Account is prepared to show the distribution of profits among partners as per the provision of Partnership Deed (or as per the provision of Indian Partnership Act, 1932 in the absesnce of Partnership Deed). It is an extension of Profit and Loss Acccount. It is nominal account.

The Journal Entries regarding Profit and Loss Appropriation Account are as follows:

1. For transfer of balance of Profit and Loss Account

Profit and Loss A/c Dr.

          To Profit and Loss Appropriation A/c

(Being net profit transferred to P & L Appropriation A/c)

2. For Interest on Capital

1. For allowing Interest on capital

Interest on Capital A/c

            To Partners' Capital/Current A/cs

(Being interest on capital allwoed @ ___ % p.a)

2. For transferring Interest on Capital to Profit and Loss Appropriation

 Please click the link below to download pdf file for CBSE Class 12 Accounting for Partnership Firms Fundamentals.



Click to View or Download pdf file
Click for more Accountancy Study Material

Latest NCERT & CBSE News

Read the latest news and announcements from NCERT and CBSE below. Important updates relating to your studies which will help you to keep yourself updated with latest happenings in school level education. Keep yourself updated with all latest news and also read articles from teachers which will help you to improve your studies, increase motivation level and promote faster learning

Board Cancelled Official CBSE Statement

Keeping in view the requests received from various State Governments and the changed circumstances as on date, following has been decided- 1. Examinations for classes X and XII which were scheduled from 1st July to 15th, 2020 stand cancelled. 2. Assessment of the...

Internal Assessments and CBSE Reduced Syllabus

CBSE on 7th July 2020 had announced the ‘Revised Academic Curriculum for classes IX-XII for the session 2020-21’ to mitigate the effect of face to face learning loss due to the closure of schools to contain COVID-19 Pandemic. The rationalization of syllabus up to 30% ...

CBSE tele counselling for board exams

The 23rd edition of post-result counselling facility will be activated by CBSE with the help of 95 volunteer principals and trained counsellors from within affiliated schools located in and outside India. While there are 73 Counsellors in India including special...

Re verification of Class 12 Board Exams Marks

Modalities and Schedule for Senior Secondary School (Class XII) Examinations, 2020 in the subjects whose examinations have been conducted by CBSE for the processes of (I) Verification of Marks (II) Obtaining Photocopy of the Evaluated Answer Book(s) (Ill) Re-evaluation...

Training Programme on the Alternative Academic Calendar

In view of the extraordinary situation prevailing in the world due to COVID-19 pandemic, the CBSE Board had announced the ‘Revised Academic Curriculum for classes 9- 12 for the session 2020-21’. The reduced topics will not be part of the internal assessment or for the...

CBSE Decision on Board Exam 2020

The Class 10 and 12 exams are cancelled, and results for both 10th and 12th would be declared by July 15 based on internal exams. CBSE Class 12 students would have the option to appear for the exams at a later date. CBSE has a scheme in which marks scored in past 3...

Studies Today