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Full Drawings from partnership ???

Pratik Shah (Final C.A.) (41 Points)

14 July 2010

Suppose a partnership firm has made Rs. 100,000/- profit for the year .

A partner having 25% share is considering to draw all the profits he is entitled to.

What consequence would he have to face in future ?

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4 Replies

CA Shiv (Business Controller) (2987 Points)
Replied 14 July 2010

No problem.. he can withdrew it.... as it wont affect the firm.. presentation will be like:

Capital

+ profit

- drawings...( can be any amount... )

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Pratik Shah (Final C.A.) (41 Points)
Replied 14 July 2010

Thanks Man !!!

Yes, I know about this, but i was considering some other effect though not accounting.

I was thinking about the person's chances of getting Loan from a bank ?

Considering his Low Capital in the Firm?

Does this affect his credit worthiness ???

CA Shiv (Business Controller) (2987 Points)
Replied 14 July 2010

HMmm.... IT wont be directly...... As if you want to grab a loan than you can show capital account of last 3 years... also forecast of profit of the frm for next 3 years.... thats the simpleway.....

Amir (Learner) (4016 Points)
Replied 14 July 2010

Hi Pratik,

Drawings from Partnership Firm will not affect the net worth of the partner unless he has parted with the money that he has drawn from the firm. The same will appear in his Bank a/c or in form of any other investment in personal name.