Meycauayan College

Meycauayan, Bulacan
Rowena Pineda-Tan
Individual Activity 1

ACCOUNTING 2 with SAP (Sales and Distribution Module)

Partnership
1 Accounting  
  Principles  
    definition of partnership
    characteristics
    advantages & disadvantages
    classification
    kinds of partners
    articles of partnership
     

INDIVIDUAL ACTIVITY:
Name: Jezreel Sumagang
Course: BS Accountancy

1. Define partnership as defined by the civil code of the Philippines Article 1767.
According to civil code of the Philippines article 1767, partnership is when
two or more people bind themselves to contribute money, property or industry to a
common fund, with the intentions of dividing the profits among themselves.
2. In relation to the characteristics of partnership, explain/describe consensual,
principal, bilateral or multilateral, nominate, preparatory, onerous, mutual
contribution, division of profit and loss, co-ownership of contributed assets, mutual
agency, limited life, and unlimited liability.
Consensual – mutual consent of the all the partners in the activities within
partnership like transferring assets and interest to the firm.
Principal – every partner is a principal or an agent wherein they are bind to each
other and can stand alone.
Bilateral and multilateral – may involve two or more person
Nominate – mutually beneficial to the members within the partnership
Onerous – there must be a contribution of money property, or industry into a
common fund
Division of profit and loss – profit gained and loss is divided/shared to each other
Co-ownership of contributed assets – any assets which are already subjected into
partnership are now owned the partnership itself.
Mutual Agency – each partner is an agent to partnership to each other.
Limited life – limited timespan of the partnership
Unlimited Liability – full legal responsibility that business owners and partners
assume for all business debts.

3. Make an outline of the advantages and disadvantages of a partnership.

Advantages of partnership
 More members provide better ideas and concept of partnership
 Business is easier to establish and start-up cost are low
 Generally easy to form, manage and run.
 There are shared responsibilities in running the business
 Partners may share information and ideas in decision making with can help
improve the business.
Disadvantages of partnership
 In terms of liability, the debts of the business is unlimited which mean
they share the financial risks of the business
 Disagreements between partners may occur due to contrasting decisions
and ideas.
  Agreement should always exist between partners thus it may provide less
freedom and compromises to the other partner.
 Taxation laws mean that partners must pay taxes the same as sole traders
each submitting self-assessment tax return each year.
 Profit Sharing can be disadvantages if there is an unequal effort between
partners then at the same time both are gaining equal profits.

4. Distinguish the classification of partnerships:

● Universal partnership of all present property – the property which belonged
to each of the partners at the time of the constitution of the partnership,
becomes the common property of all the partners as well as profits which
they may acquire therewith.

● Universal partnership of profits – it comprises all that the partners may

acquire by their industry or work during the existence of the partnership

● Particular partnership – has for its object determinate things, their use or
fruits, or a specific undertaking, or the exercise of a profession or vocation

● General partnership – liable up to personal assets but subject to

reimbursement. Insanity of a general partner does not result in the automatic
dissolution of the partnership but only serves as a ground for the application
for judicial dissolution

● Limited partnership- one formed by two or more persons under the

provisions of Art. 1844, having as members one or more general partners
and one or more limited partners. The limited partners as such shall not be
bound by the obligations of the partnership

● Partnership with a fixed term or for a particular undertaking- A partnership

wherein the term for which the partnership is to exist is fixed or agreed
upon or one formed for a particular undertaking, and upon the expiration of
the term or completion or the particular enterprise, the partnership is
dissolved, unless continued by the partners
 ● Partnership at will - Partnership at will means a partnership in which the
partners have not agreed to remain partners until the expiration of a definite
term or the completion of a particular undertaking

● Commercial or trading partnership - A relationship with another corporate

entity, institution, defined customer group or other party which enables you
to acquire large volumes of new incremental business profitably and to
access new business opportunities which you could not do alone.

● Professional or non-trading partnership- A partnership whose business does

not involve buying and selling as a day to day activity.

● De jure partnership- one which has complied will all the legal requirements
for its establishment

● De facto partnership- one which has failed to comply with all the legal
requirements for its establishment

5. Distinguish the kinds/classification of partners:

● General partner - is one of two or more investors who jointly own a
business and assume a day-to-day role in managing it
● Limited partner- A limited partner is a part-owner of a company whose
liability for the firm's debts cannot exceed the amount that an individual
invested in the company
● General-limited partner – who assumes day to day in managing the firm and
also a part owner of the company.
● Capitalist partner - One who contributes money or property to the common
fund of the partnership
● Industrial partner - One who contributes his knowledge or personal service
to the partnership
● Capitalist-industrial partner – One who both contributes knowledge and
money to the partnership
● Managing partner - An active partner is also known as Ostensible Partner.
As the name suggests he takes active participation in the firm and the
running of the business
● Liquidating partner - One who is designated to wind up or settle the affairs
of the partnership after dissolution
 ● Nominal partner - This is a partner that does not have any real or significant
interest in the partnership. So, in essence, he is only lending his name to the
partnership
● Ostensible partner- One who holds himself out as a member of an actual
partnership or one apparently existing or consenting to the partners or
apparent partners representing him as such though as between themselves
he is no partner
● Secret partner - One who takes active part in the business but is not known
to be a partner by outside parties
● Silent partner - One who does not take active part in the business of the
partnership though may be known as a partner
● Dormant partner – the partner does not participate in the daily functioning
of the partnership firm.

6. What is the articles of partnership?

Partnerships are required to be registered with the Securities and Exchange

Commission (SEC). Registration is done by filing the Articles of Partnership with
the SEC. The Articles of Partnership define the obligations, responsibilities and
roles of each partner and how the profits and losses will be shared and states who
the general and limited partners are. It sets forth all the terms and conditions
mutually agreed by the partners thereto.