ACCCOB1 Chapter 2 - Group 3

Identify which of the following are characteristics of partners:

1. I. According to liability (general/limited)

2. II. According to asset (property/plant/equipment)

   III. According to contribution (capitalist/industrial/capitalist-industrial)

3. IV. According to background (track record/history)

4. V. According to management (managing partner/silent)

5. VI. Others (nominal/secret/dormant/ostensible partner)

• I, II, III

• I, III, V, VI

• I, II, V, VI

• I, II, IV , V

Classify which of the options are considered to be advantages or disadvantages of a partnership?

Groups:

(a) Advantages

,

(b) Disadvantages

• Greater amount of capital may be raised compared to a sole proprietorship
• Limited amount of capital may be raised compared to a corporation
• Managed better since more than one person supervises business affairs
• It is easy and inexpensive to form and to dissolve
• The unlimited liability of a partnership defers many from joining in a partnership
• There is a likelihood of dissension and disagreement when each of the partners
• There is relative flexibility in decision-making compared to a corporation
• There is lack of business continuity because it can easily be dissolved
• The unlimited liability of general partners makes it less risky for creditors
• A general partner may be subjected to a personal liability for erroneous management
• There is difficulty in transferring ownership interest because ownership interest in the partner

3. A partnership is supported by a partnership agreement called the Article of Co-Partnership, which is a written agreement among the partners, outlining the nature and terms of the partnership contract.

• True

• False

4. Which of the following information is included in the Articles of Co-Partnership?

• 1. The rights and duties of each of the partners.

• 1. The name of the partnership.

• 1. The manner of dividing profit or loss among the partners.

• All of the above

Supplemental Information:

The Article of Co-Partnership contains the following information:

1. 1. The name of the partnership.

2. 2. The names, addresses of the partners, classes of partners stating whether the partner is a general or a limited partner.

3. 3. The effective date of the contract.

4. 4. The purpose and principal place of business of the partnership business.

5. 5. The capital of the partnership stating the contributions of each of the partners.

6. 6. The rights and duties of each of the partners.

7. 7. The manner of dividing profit or loss among the partners.

8. 8. The conditions under which the partners may withdraw money or other assets;

9. 9. The manner of keeping the books of accounts.

10. 10. The causes for dissolution and the provision for arbitration in settling disputes.

Vote "Yes" if you're done reading

• Yes

• No

5. In a partner’s equity, each partner has an equal amount of equity.

• True

• False

Supplemental Information:

Partner's equity is similar to owner's equity however there are more accounts present due to there being more than one owner. The amount in a partner’s equity depends on the contribution each partner gives. It is not always equal.

Vote "Yes" if you're done reading

• Yes

• No