Exercise I 1.

REVIEW QUESTIONS
1. Forms of Business Organizations
a. Based on Ownership
1. Sole or Single Proprietorship
2. Partnership
3. Corporation
b. Based on Activity Undertaken
1. Service Concern
2. Merchandising or Trading Concern
3. Manufacturing Concern
2. A partnership is a form of business
organization where two or more persons, called
partners, own the business. The partners enter
into a partnership contract which may be written
or oral. This contract binds them to contribute
money, property or industry into a common fund
with the intention of dividing the profit among
themselves.
3. Characteristics of a Partnership
a. Mutual agency
b. Limited life
c. Unlimited liability
d. Co-ownership of property
e. Co-ownership of profit
f. Legal entity
4. The partners may contribute money, property
or industry when a partnership is formed.
5. The purposes of partnership formation are to
generate profit, to practice profession, to have
better management and others.
6. Kinds of Partnerships
a. According to activities
1. Service
2. Merchandising or Trading
3. Manufacturing
b. According to liability
1. General
2. Limited
c. According to object
1. Universal property of all present
property
2. Universal partnership of profits
3. Particular partnership
d. According to duration of partnership
existence
1. Partnership at will
2. Partnership with a fixed term
7. Kinds of Partners
a. According to contribution
1. Capitalist
2. Industrial
3. Capitalist-Industrial
b. According to liability
1. General
2. Limited
c. According to management
1. Managing Partner
2. Silent
d. Others
1. Nominal
2. Secret

3. Dormant Partner
8. Advantages of a Partnership
a. Easy to form and to dissolve
b. Greater amount of capital may be raised
c. Relative freedom and flexibility in
decision-making
d. Better management
e. Reliable from the point of view of
creditors
Disadvantages of a Partnership
a. Lack of business continuity
b. Limited amount of capital
c. Unlimited liability of a partnership
d. A general partner may be subjected to a
personal liability for erroneous management
decisions made by his associates.
e.
Likelihood
of
dissension
and
disagreement
f. Difficulty in transferring ownership
interest
9. Articles of Partnership is an agreement in
writing among the partners governing the nature
and terms of the partnership contract. It helps in
avoiding misunderstanding among the partners.
It governs the formation, operation and
dissolution of the partnership and is required to
be registered with SEC. It contains the
following information:
a. The name of the partnership
b. The names, addresses of the partners,
classes of partners stating whether the
partner is a general or a limited partner
c. The effective date of the contract
d. The purpose and principal place of
business of the business
e. The capital of the partnership stating the
contributions of each of the partners
f. The rights and duties of each of the
partners
g. The manner of dividing profit or loss
among the partners
h. The conditions under which the partners
may withdraw money or other assets
i. The manner of keeping the books of
accounts
j. The causes for dissolution and the
provision for arbitration in settling disputes
10. Partners equity refers to the contribution of
the partner to the partnership.