PARCOR
Characteristics of a Partnership Business
Voluntary Association
Legal Entity
Co-Ownership of Property
Taxable Entity
Mutual Agency
Limited Life
Unlimited Liability
An organization where two or more persons but not more than 5 bind themselves together
Partnership
Elements of a Partnership
There must be a valid contract whether oral or written
A partnership must be put up by persons having legal capacity to contract
Their contributions must be in the form of money, property or industry
The purpose of their business is to divide profits among themselves
Is an agreement concerning the formation, operation, dissolution and liquidation of partnership embodied in a contract.
Articles of a Co-Partnership
New civil code requires that the contributions of partners in cash or in properties
Article 1772
What is SEC
Securities and Exchange Commission
a government agency which supervises Partnership and Corporation.
SEC
Contents in the Articles of Co-Partnership
Name of the Partnership business
Principal place of the business
Date of affectivity and the life of the partnership business
Purpose of the partnership business
Names, addresses and contributions of the partners
Manner of management of the partnership
Manner of dividing the Profits and Loss
Periodic withdrawals allowed for the partners
Manner of liquidating the partnership with the rights and duties of the partners
Arbitration disputes
Rights of a Partner
right over specific partnership property
right to share in the profits resulting from business operation
right to share in the remaining assets upon partnership liquidation after the partnership creditors have been paid.
right to co-manage the partnership
right to ask that the books be kept in the principal place of business subject to inspection at a reasonable time.
The accountant must have a sufficient knowledge of the legal provisions regarding a partnership as these would affect certain aspects of partnership accounting
Accounting for a Partnership
these would affect certain aspects of partnership accounting (4)
investments of the partners
dissolution of the partnership
distribution of profit or loss to the partners
liquidation of the partnership
Accounting equation for Partnership expressed;
A=L+PE
The rights of the Partners over the Net Assets of the business is called?
Partners Equity
Each Partners equity is represented by two accounts
Partners Capital and Partners Drawing
Contribution made are credited to each partner’s capital account to Increase the partner’s equity.
Investment
Withdrawal of capital is debited to each partners capital Account to decrease the partners equity.
Permanent Withdrawal