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ACCOUNTING FOR PARTNERSHIP
AND CORPORATION
PRELIMS
ARTICLE 1767
By the 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 profits among themselves.
HISTORY OF PARTNERSHIP
2300BC - Code of Hammurabi
1383 - Francesco di Marco Datini
1950 - Civil Code of the Philippines
CHARACTERISTICS OF PARTNERSHIP
1. MUTUAL AGENCY
2. UNLIMITED LIABILITY
3. LIMITED LIFE
4. MUTUAL PARTICIPATION OF PROFITS
5. LEGAL ENTITY
6. CO-OWNERSHIP OF CONTRIBUTED ASSETS
ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
ADVANTAGES
- Easily formed
- Greater amount of capital
- Relative freedom and flexibility in decision-making
- Better management
DISADVANTAGES
- Unlimited Liability
- Easily dissolved
- Difficulties in transferring ownership interest
(Delectus Personae)
- Limited capital
CLASSIFICATION OF PARTNERSHIP
AS TO OBJECT:
A. UNIVERSAL PARTNERSHIP
1. Universal partnership of all present property
partners contribute all the property (ART 1778)
2. Universal partnership of profits
each of the partners may possess profits acquired
during the existence of the partnership. (ART 1780)
B. PARTICULAR PARTNERSHIP
- object determinate things.
AS TO LIABILITY OF PARTNERS:
A. GENERAL PARTNERSHIP
- consists of general partners
- unlimited liability
B. LIMITED PARTNERSHIP
partnership consisting of a general partner (unlimited
liability) and a limited partner (limited liability).
AS TO DURATION:
A. PARTNERSHIP AT WILL
- may be terminated at anytime.
B. PARTNERSHIP WITH A FIXED PERIOD
- the term is fixed and agreed
- has an expiration and can be dissolved, unless
continued by partners.
AS TO LEGALITY OF EXISTENCE:
A. DE JURE PARTNERSHIP
- complied all the legal requirements.
B. DE FACTO PARTNERSHIP
- failed to comply the legal requirements.
AS TO REPRESENTATION TO OTHERS:
A. ORDINARY OR REAL PARTNERSHIP
- exists among the partners
B. OSTENSIBLE OR PARTNERSHIP BY ESTOPPEL
- no formal partnership agreement.
- a person who is not technically a partner can be held
liable as a general partner.
AS TO PUBLICITY:
A. SECRET PARTNERSHIP
- existence of certain persons is not avowed.
B. NOTORIOUS OR OPEN PARTNERSHIP
- existence is avowed.
AS TO PURPOSE:
A. COMMERCIAL OR TRADING
- formed for the transaction of the business.
B. PROFESSIONAL OR NON-TRADING
- formed for the exercise of a profession.
KINDS OF PARTNERS
ACCORDING TO NATURE OF CONTRIBUTIONS
ACCORDING TO LIABILITY
A. GENERAL PARTNER - one whose liability to third
persons extends to his separate (private) property.
B. LIMITED PARTNER - one whose liability to third
persons is limited only to the extent of his capital
contribution to the partnership.
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ACCORDING TO THE KNOWLEDGE BY THE PUBLIC AND
MANAGEMENT OF THE PARTNERSHIP
A. SECRET PARTNER - not known to the public as a
partner but participates actively in the management of
partnership affairs.
B. SILENT PARTNER - known as a partner but is not
active in the management of partnership affairs
C. DORMANT PARTNER - not known to be a partner
and is not active in the management of the partnership
ACCORDING TO THE NATURE OF MANAGEMENT
WORK
A. MANAGING PARTNER - manages the operation of
the partnership of the partners
B. LIQUIDATING PARTNER - winds up the affairs of the
partnership
PSEUDO PARTNERS
A. NOMINAL PARTNER - not a partner but allows the
use of his name either for accomodation of for
consideration; does not participate in the partnership's
management and has no financial investment in the
topic.
B. PARTNER BY ESTOPPEL - not a partner but
represents himself or consents to another representing
him to a third person as a partner in an existing
partnership; the law considers him to be a partner in
that existing partnership as far as the third person is
concerned.

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ACCOUNTING FOR AND CORPORATION PARTNERSHIP PRELIMS ARTICLE 1767 By the 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 profits among themselves. partnership consisting of a general partner (unlimited liability) and a limited partner (limited liability). AS TO DURATION: A. PARTNERSHIP AT WILL - may be terminated at anytime. B. PARTNERSHIP WITH A FIXED PERIOD - the term is fixed and agreed - has an expiration and can be dissolved, unless continued by partners. HISTORY OF PARTNERSHIP 2300BC - Code of Hammurabi 1383 - Francesco di Marco Datini 1950 - Civil Code of the Philippines AS TO LEGALITY OF EXISTENCE: A. DE JURE PARTNERSHIP - complied all the legal requirements. B. DE FACTO PARTNERSHIP - failed to comply the legal requirements. CHARACTERISTICS OF PARTNERSHIP 1. MUTUAL AGENCY 2. UNLIMITED LIABILITY 3. LIMITED LIFE 4. MUTUAL PARTICIPATION OF PROFITS 5. LEGAL ENTITY 6. CO-OWNERSHIP OF CONTRIBUTED ASSETS AS TO REPRESENTATION TO OTHERS: A. ORDINARY OR REAL PARTNERSHIP - exists among the partners B. OSTENSIBLE OR PARTNERSHIP BY ESTOPPEL - no formal partnership agreement. - a person who is not technically a partner can be held liable as a general partner. ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP ADVANTAGES - Easily formed - Greater amount of capital - Relative freedom and flexibility in decision-making - Better management DISADVANTAGES - Unlimited Liability - Easily dissolved - Difficulties in transferring ownership interest (Delectus Personae) - Limited capital AS TO PUBLICITY: A. SECRET PARTNERSHIP - existence of certain persons is not avowed. B. NOTORIOUS OR OPEN PARTNERSHIP - existence is avowed. CLASSIFICATION OF PARTNERSHIP KINDS OF PARTNERS AS TO OBJECT: A. UNIVERSAL PARTNERSHIP 1. Universal partnership of all present property – partners contribute all the property (ART 1778) 2. Universal partnership of profits – each of the partners may possess profits acquired during the existence of the partnership. (ART 1780) B. PARTICULAR PARTNERSHIP - object determinate things. ACCORDING TO NATURE OF CONTRIBUTIONS AS TO LIABILITY OF PARTNERS: A. GENERAL PARTNERSHIP - consists of general partners - unlimited liability B. LIMITED PARTNERSHIP AS TO PURPOSE: A. COMMERCIAL OR TRADING - formed for the transaction of the business. B. PROFESSIONAL OR NON-TRADING - formed for the exercise of a profession. ACCORDING TO LIABILITY A. GENERAL PARTNER - one whose liability to third persons extends to his separate (private) property. B. LIMITED PARTNER - one whose liability to third persons is limited only to the extent of his capital contribution to the partnership. ACCORDING TO THE KNOWLEDGE BY THE PUBLIC AND MANAGEMENT OF THE PARTNERSHIP A. SECRET PARTNER - not known to the public as a partner but participates actively in the management of partnership affairs. B. SILENT PARTNER - known as a partner but is not active in the management of partnership affairs C. DORMANT PARTNER - not known to be a partner and is not active in the management of the partnership ACCORDING TO THE NATURE OF MANAGEMENT WORK A. MANAGING PARTNER - manages the operation of the partnership of the partners B. LIQUIDATING PARTNER - winds up the affairs of the partnership PSEUDO PARTNERS A. NOMINAL PARTNER - not a partner but allows the use of his name either for accomodation of for consideration; does not participate in the partnership's management and has no financial investment in the topic. B. PARTNER BY ESTOPPEL - not a partner but represents himself or consents to another representing him to a third person as a partner in an existing partnership; the law considers him to be a partner in that existing partnership as far as the third person is concerned. Name: Description: ...
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