Answered: Describe the purpose of the articles of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Describe the purpose of the articles of partnership and list specific items that should be included in this agreement.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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Articles of partnership agreement:

It is a legal agreement which may be oral or written is often known as articles of the partnership agreement. It forms the central governance for partnership operation. It is a negotiated agreement that partners create and an unlimited number of variations can be encountered. Partners’ rights and responsibilities can create a variance.

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