Accountancy Part AAccounting for Partnership

If a Partner derives any profit for himself/herself from any transact…

If a Partner derives any profit for himself/herself from any transaction of firm or use of property of business ..............

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → He/she has to pay it to the firm

A partner acts for the firm, so any gain he makes by using the firm’s dealings, property or name is not his own. The Partnership Act makes him hand over such a gain; it belongs to the firm and is shared by all partners.

Option (1) He/she can keep as personal profit — Incorrect. The Act does not allow the partner to keep it.
Option (3) He/she has to pay it to the firm and claim from the business, if there is any loss — Incorrect. The Act gives no right to claim such a loss from the firm.
Option (4) He/she may divide among the partner as he/she wishes — Incorrect. The profit goes to the firm and is shared as per the firm’s ratio, not as the partner wishes.

NCERT (2026-27 edition):
Provisions of Partnership Act Relevant for Accounting – “… (i) If a partner derives any profit for him/her self from any transaction of the firm or from the use of the property or business connection of the firm or the firm name, he/she shall account for the profit and pay it to the firm.”