Professional Documents
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EN102 - Library Research
EN102 - Library Research
LIBRARY RESEARCH
RESEARCH QUESTIONS
TABLE OF CONTENTS
Title Page
Thesis statement
Research Questions 3
Definition of Terms 5
Introduction
8-14
Conclusion
15
References
16
DEFINITION OF TERMS
Accounts Payable- refers to debts that must be paid off within a given period of time in
order to avoid default.
Asset- is a resource controlled by the entity as a result of past events and from which future
economic benefits are expected to flow to the entity.
Bonus-it is the amount of capital or equity transferred by one partner to another partner.
Capital - wealth in the form of money or other assets owned by a person or
organization or available or contributed for a particular purpose such as starting a
company or investing.
Creditor- An entity (person or institution) that extends credit by giving another entity
permission to borrow money if it is paid back at a later date.
Dissolution- means the discontinuance of the legal relationship between all the
partners of the firm.
Equity interest- it refers to the partial or full ownership in a company by shares of
stock, rather than a creditors interest from being owed money.
Fair value-refers to an estimate of a security's worth on the open market.
Incorporation- refers to the process of legally declaring a corporate entity as separate
from its owners.
Investors- An individual who commits money to investment products with the
expectation of financial return.
Liability- In financial accounting, it is defined as an obligation of an entity arising
from past transactions or events, the settlement of which may result in the transfer or
use of assets, provision of services or other yielding of economic benefits in the future.
Profit- refers to the financial benefit that is realized when the amount of revenue gained
from a business activity exceeds the expenses, costs and taxes needed to sustain the
activity.
INTRODUCTION
5
In the Business cycle of the partnership firms, Dissolution is one of the factors
that cant be hindered due to the partnerships limited life affected by natural-occurring
instances such as the death of a partner, Admission of a new partner with an objective
of expanding the business or any which can highly benefit the entity, retirement of a
partner, Incorporation of the partnership and mutual agreement among them to ensure
the life of the entity. Dissolution refers to the change in membership which is also
caused by the operation of the law such that whenever the partnership firm showed
subsequent illegality in its operation it will be subject for Dissolution by the government
as well as the court (Mathur, 2010)
OUTLINE
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I.
Dissolution
II.
Causes of Dissolution
A. By act of partners
1.
2.
3.
4.
5.
Mutual Agreement
Withdrawal or retirement of a partner
Death of a partner
Incorporation of the partnership
Admission of a partner
B. By operation of law
C. By court order
III.
Effects of Dissolution
A. To the business partners/firm
B. To the society
1. Customers, creditors & investors
2. Government & public
3. Employees of the firm
C. To the economy
BODY
I.
Dissolution
The Dissolution of the partnership refers to any change in the relation of the
partners resulting to the creation of a new business entity which can be
caused by any partner desisting from the partnership firm. As have said in
section 39 of the Indian Partnership Act, Dissolution means the
discontinuance of the legal relationship between all the partners of the firm
(Mathur, 2010).
A business entity may be dissolved without making it into an end however
liquidation is always preceded by dissolution. Dissolution is already a part of
the business cycle of a partnership entity which cannot be kept from occurring
because of the limited life of a partnership (W. Ballada & S. Ballada, 2014).
As Ballada have said, Dissolution of the partnership does not necessarily
imply that business operations will come to an end. Dissolution only pertains
to changes in the ownership and continues until all the partnership affairs are
settled due to the said changes (2014).
II.
Causes of Dissolution
A. By act of partners
1. Mutual Agreement, the partners of the business firm may set an
agreement supported by a contract about when will the partnership
end or be dissolved based on Section 40 of the Indian Partnership Act,
however this agreement can be disregarded if the business firm
violates a law or if there is any justifiable grounds that it must be
dissolved immediately even if the business does not yet cover up the
agreed operating period of the partners (Mathur, 2010)
2. Withdrawal or retirement of a partner, the partners may retire from a
partnership because of old age or incapability of a partner to fulfill their
duties, and to pursue for better opportunities. This type of Dissolution
may be accomplished by any of the following ways:
B. By Operation of Law
It is said that the partnership that has done any subsequent illegal
phenomenon or activity which makes it unlawful for business will be
subject to dissolution immediately (Mann & Roberts, 2014).
C. By Court Order
The court is permitted by the government to dissolve a partnership when
a partner becomes insane, incompetent such that they are permanently
incapable of fulfilling his duties as a partner, also whereas when a partner
is guilty of misconduct or committing of an illegal activity which can highly
affect the name or image of the business entity.
A partnership can also be dissolved by the court when a partner transfers
his share or interest in the partnership to a third party as a form of
investment. As when the business is totally bankrupt such that the
business can no longer earn profit but can be run only at a loss. Also,
when the primary purpose of the business was no longer achieved and the
partners have no reliable connection with each other, it is very useless to
continue the operations of the business which will lead eventually to
dissolution (Mathur, 2010).
III.
Effects of Dissolution
A. To the business partners/firm
10
After the business entity has dissolved, there is a need to wind up all the
affairs of the firm. Such that all of the assets must be realized at fair value,
debts or obligations of the firm must be paid off and the excess of it should
be distributed among the partners to recognize their participation in the
business based on Section 46 of the Indian Partnership Act.
According to Section 50, when any of the partners earns any profit from
any transaction connected with the firm even after dissolution, he is
required to share the said profit with the other partners (Mathur, 2010).
B. To the Society
1. Customers, creditors and investors
Any 3rd party who extended credit to the partnership for investment or
lending loans to the partnership entity before Dissolution may hold the
partnership liable for any transaction such that the business entity may
have either legal or constructive obligation towards creditors, investors
and customers such that the legal obligation may arise when the entity
has binded to a contract which made legally enforceable. An example
of this obligation is the payment of accounts payable for goods and
services received from a creditor (Mann & Roberts, 2014).
While, Constructive obligations arise from normal business practice,
custom and a desire to maintain good business relations or act in an
equitable manner, according to Valix (2014).
A constructive obligation pertains to the liability of the business which
is not legally compelled to be settled. An example is that when one
customer has given a bad impression on the goods, products or any
services that the business has rendered, the entity may decide
whether or not to settle the argument between them and their
customers to maintain the good image of the business (C.A. Valix, C.
Valix & Peralta, 2014).
As mentioned earlier, investors and creditors who have extended credit
may hold the partnership liable such that those investors and creditors
11
CONCLUSION
Partnerships operate under the concept of unlimited liability and unless otherwise
agreed upon by the partners, each one of them acts as manager and agent of the
13
partnership and consequently, their acts bind the partnership but also causes it to be
dissolved (De Leon, 2005).
One of the main purposes of a business is to grow. This can come in many forms
such as revenues, market share and community influences. It sounds easy enough but
its not, because of the underlying factors that can make this growth difficult. And these
factors are rapidly changing customers, softer market and fragile economic policies of
ones country.
Based on this research, one can conclude that dissolution mainly affects the
business entity and its partners, also the government and the economy are affected
since new business transactions are forbidden to operate until winding up is over, such
that it would disturb the flow of economic benefits not only to the business itself but also
to the government which creates a tremendous effect in uplifting the economy (De
Leon, 2005).
REFERENCES
3.
4.
5.
6.
7.
gfe_rd=cr&ei=sNgYVOfZMcLEoAO02YGwBw#q=capital+definition
8. Investopedia. Retrieved September 24, 2014 from
http://www.investopedia.com/terms/i/incorporate.asp
9. Financial dictionary. Retrieved September 15, 2014 from
http://www.investinganswers.com/financial-dictionary/stock-valuation/fair-value995
10. Investopedia. Retrieved September 24, 2014 from
http://www.investopedia.com/terms/p/profit.asp
11. Investopedia. Retrieved September 15, 2014 from
http://www.investopedia.com/terms/c/creditor.asp
12. Investopedia. Retrieved September 15, 2014 from
http://www.investorwords.com/2630/investor.html
13. Investopedia. Retrieved September 15, 2014 from
http://www.investopedia.com/terms/a/accountspayable.asp
14. Hermes, E. Economic Outlook no.1208- 1209 / Growth: A giant with feet of clay
10 industry short stories expose Macroeconomic fragility
http://www.eulerhermes.com/mediacenter/Lists/mediacenterdocuments/Economic-Outlook-A-giant-with-feet-of-clay-Jul14.pdf
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