ACCTBA2 NOTES 15 JANUARY 2013

ACCTBA2 NOTES – 15 January 2013 I. DEFINITION OF PARTNERSHIP  Two or more persons bind themselves to contribute money, property or industry with the intention of dividing profits among themselves



III. ADVANTAGES  Easy and inexpensive to operate  Closer supervision of activities  Easy credit due to unlimited liabilities  Personal element is retained  Combined personal liabilities of partners = easy access to capital IV. DISADVANTAGES  Unlimited liabilities deters capitalist to invest  Wrongful acts of a partner may subject others to personal liabilities  Can easily dissolve, as it is less stable  Divided authority  Dissension and disagreement

VI. CLASSES OF PARTNERS  As to contribution o Capitalist  Contributes money or property

 

II. CHARACTERISTICS  Mutual agency  Unlimited liabilities o Not able to pay debts = acquisition of property  Limited life o Partner added/withdrew = partnership is dissolved  Mutual participation in profits  Legal entity  Co-ownership of property  Income tax o 32%, except for general professional partnership

V. KINDS OF PARTNERSHIP  As to activity o Trading o Non-trading  As to object o Universal partnership of all properties o Universal partnership of all profits o Particular partnership  As to liability of partners o General partnership  Majority = unlimited liabilities o Limited partnership  Majority = limited liabilities  As to duration o Partnership at will o Partnership with fixed term  As to existence o Ordinary partnership o Partnership by estoppel  As to legality o De jure partnership  Complied with requirements establishment o De facto partnership  Failed to comply with requirements  As to publicity o Secret o Open

Industrial  Contributes industry, labor or skill o Industrial-Capitalist As to liability o General partner o Limited partner As to management o Managing partner o Silent partner  Does not participate Other types of partners o Liquidating partner  If company liquidates, the liquidating partner will supervise the process o Nominal partner  Only partner by name; protects real partner o Secret partner  Active in management, but not known as a partner o Ostensible partner  Active in management, known as a partner o Dormant partner  Both a secret and a silent partner  Not active in management o

for

VI. ARTICLES OF CO-PARTNERSHIP  Name of partnership  Name and addresses of partners, classes of partners  Effective date of contract  Purpose/s and principal place of business  Rights and duties of each partner  Manner of dividing profits and losses including allowances and interest  Conditions under which a partner may withdraw money/other assets for personal use  Manner of keeping books of accounts  Causes for dissolution  Provision of the arbitration in settling disputes