ICCT Colleges Foundation, Inc.

Fundamentals of Accountancy, Business and Management

BPACTG01
CHAPTER 3 – ACTIVITY / ASSIGNMENT
Answer the following questions/statements in not less than 5 sentences.

1. Who are the users of accounting information?

-External users are individuals and others that have current or potential financial interest
in the reporting entity but are not involved in the daily operations of the entity. The
information needs of these users are diverse so that only the primary or the general-
purpose financial statements are provided.
Internal users include the board of directors, chief executive officers, chief financial
officers, vice presidents, internal auditors, business unit managers, plant managers and
the supervisors.

The users of accounting information and their information needs follow:

 Employees are interested in information about the stability and profitability of their
employers.
 Stockholders or investors need information to help them determine whether they
should buy, hold or sell.
 Creditors or lenders are interested in information that enables them to determine
whether their loans and the related interest will be paid when due.
 Customer have an interest in information about the continuance of an enterprise,
especially when they have a long-term involvement with, or are dependent on, the
enterprise.
 Suppliers and other trade creditors are interested in information that enables them
to determine whether amounts owing to them will be paid when due.
 Government and their agencies are interested in the allocation of resources and,
therefore, the activities of the enterprises.
 Public. Enterprises affect members of the public in a variety of ways.

2. Define partnership.
 -In a contract of partnership, two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing the
profit among themselves.
Characteristics of a Partnership
Mutual Contribution. There cannot be a partnership without contribution of money,
property or industry (i.e. work or services which may either be personal manual
efforts or intellectual) to a common fund.
Division of Profits or Losses. The essence of partnership is that each partner must
share in the profits or losses of the venture.
Mutual Agency. Any partner can bind the other partners to a contract if he is acting
within his express or implied authority.
Limited Life. A partnership has a limited life. It may be dissolved by the admission,
death, insolvency, incapacity, withdrawal of a partner or expiration of the term
specified in the partnership agreement.
Unlimited Liability. All partners (except limited partners), including industrial
partners, are personally liable for all debts incurred by the partnership.
Income Taxes. Partnerships, except general professional partnerships, are subject to
tax at the rate of 30% (per R.A. No. 9337) of taxable income.
Partner's Equity Accounts. Accounting for partnerships are much like accounting for
sole proprietorship. The difference lies in the number of partner's equity accounts.

3. Define cooperative.
A cooperative is an association of persons (organization) that is owned and controlled
by the people to meet their common economic, social, and/or cultural needs and
aspirations through a jointly-owned and democratically controlled business
(enterprise).  The people of the cooperative are those who use its products, supplies,
and/or services. Profits are also often returned back to the members of the
cooperative, however, cooperatives are often more focused on services for members
than for investments. Cooperatives can be created for a number of different reasons
or to fulfill a number of different needs: jointly process goods, split costs, split control
over work, purchasing power (bulk buys), shared employees, shared wages, etc.