1. What is partnership?
Ans. Partnership is a form of business organisation in which two or more persons enter into an agreement, contribute certain capital, undertake certain lawful business to earn profit and share the profits or losses in agreed proportion.

2. What is partnership deed?
Ans.  A partnership deed is a written agreement duly stamped and signed document containing the terms and conditions of the partnership.

3. State the meaning of a Balance Sheet.
Ans. A balance sheet is a statement showing the financial position of the business in the form of its assets and liability on a particular date.

4. When are partners’ current accounts opened?
Ans. When partnership form adopts fixed capital method, it opens partners’ current accounts to record dealing of partners with partnership firm.

5. Write the meaning of bad debts?
Ans. The debt or its part which cannot be recovered from a debtor is called bad debts.

6. State the meaning of closing stock.
Ans. The unsold goods remained in the business at the end of the accounting year is known as closing stock.

7. How is closing stock valued?
Ans. Closing stock is valued at cost price or market price whichever is less.

8. What is Trial Balance?
Ans. Trial balance is a statement showing the list debit and credit balances of all the ledger accounts on a particular date.

9.What do you mean by Fluctuating Capital Method?
Ans. Fluctuating capital method is one in which capital balances of the partners go on changing every year due to entries for adjustments like drawings, interest on capital and drawings, salaries, commission, allowances, etc. Recorded in their capital accounts.

10. If the partnership deed is silent, what is the profit sharing of the partners?
Ans. If the partnership deed is silent, partners will share profits and losses in equal ratio.