Partnershi

 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.
Two or more persons may also form
a partnership for the exercise of a
profession.
Each owner is called a partner.

Characteristics of a
Partnership
Mutual Contribution
Division of Profits or Losses
Co-ownership of Contributed Assets
Mutual Agency
Limited Life
Unlimited Liability
Income Taxes
Partners' Equity Accounts

Partnership Distinguished from

Corporation
Manner of Creation
Number of Persons
Commencement of Juridical
Personality
Management
Extent of Liability
Right of Succession
Terms of Existence

Advantages of a Partnership
Better management can be attained
considering the combined expertise of
the partners.
A bigger amount of capital can be raised
as compared to a sole proprietorship.
There is a great advantage of forming a
partnership for the exercise of profession
because such partnership is exempted
from payment of income tax.
The interest of one partner cannot be
transferred to a new partner without the
consent of other partners.

Disadvantages of a Partnership
A partner's personal assets can be
ran after by the partnership creditor
in case the partnership could not
pay all its obligations.
Misunderstanding and disputes may
arise among partners.
Limited
source
of
capital
as
compared to a corporation
Limited life of existence

Kinds of Partnership
According to its activities:
Trading Partnership- its main activity is to
manufacture or purchase and sale of goods.
Non-trading Partnership- its main activity is
to engage in service activities, professional
or non-professional activities.

According to the liability of the partners:

General Partnership
Limited Partnership

Classification of Partners
1. As to contribution

Capitalist Partner
Industrial Partner
Capitalist-industrial partner

2. As to liability

General Partner
Limited Partner

3. Other classification
Nominal Partner
Secret Partner
Silent Partner
Dormant Partner

Partnership Contract
Partnership is based on contract. It
should be in writing and appear in the
public instrument to be recorded in the
Office of the Securities and Exchange
Commission when:
The capital of the partnership is P 3,000
or more in money or property and
Immovable property or real rights are
contributed into the partnership

Articles of Co-Partnership
A written contract by the partners
which requires registration with the
Securities and Exchange Commission.
Must contain the ff.:

Name of partnership, nature and place of

business
Names of partners(general or limited),
their address and contribution
Effectively date and duration of the
partnership
Accounting period to be adopted
Profit and loss sharing
Rights, powers and duties of the partners.

Formation and Opening of Partnership Books

Problem:
On January 2 20A, Ann, Beth and Cathy
formed a partnership business with the
following contributions:
Ann (general partner) contributed cash of
P100,000 and shares profit of 45%.
Beth(limited partner) contributed a brand new
motorcycle costing P120,000 in which his liability
of P15,000 from Cebu Motorama will be assumed
by the partnership and shares profit of 45%.
Cathy's(industrial partner) contribution will be her
personal services and shares 10% in profit.