Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Partnership

Question:
What is the primary role of a partner in a partnership firm in relation to the other partners?
Options:
An agent
A principal
Principal as well as the agent
Agent, Principal and Owner
Correct Answer:
Principal as well as the agent
Explanation:
There exists a relationship of mutual agency between all the partners. Each partner carrying on the business is the principal as well as the agent for all the other partners. He can bind other partners by his acts and also is bound by the acts of other partners with regard to business of the firm. Relationship of mutual agency is so important that one can say that there would be no partnership, if the element of mutual agency is absent.