Prepare capital and current accounts of partners; financial statements and partners' accounts could require application of Partnership Act 1890 for partners operating without agreement
Partners keep two personal accounts each: a capital account for permanent investment and a current account for ongoing transactions like drawings and salary. When partners have no written agreement, the Partnership Act 1890 sets the default rules instead.
Real World
When two friends opened a bakery in Manchester without a written agreement, the Partnership Act 1890 automatically entitled them to equal profit shares — even though one had invested three times more capital than the other.
Exam Focus
If the question states 'no partnership agreement', apply all Partnership Act 1890 defaults — no salary, no interest on capital, equal shares.
Essay Framework
Use PEEL to structure every paragraph. Tap each step for guidance and an example.
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