Partnership

limited partnership

2 or more persons having as members of limited and general partners who are not bound by the partnerships obligations.

Statement of changes in partners' equity

A basic financial statement which gives effect to the changes in capital balances of the partners during a specific period

Multiple bases of profit allocation

A partnership agreement that provides for a combination of several allocation procedures to be used in the distribution of profit

Division or distribution of profit

A permanent part of partnership income statement not found in that of a sole proprietorship

Arbitrary ratio

A ratio expressed in fraction or percentage which has no relation to the amount of capital investment of the partners

Income summary

A temporary account used to summarize the various revenue and expenses, the balance of which may represent profit or loss

Admission by investment

A type of admission where assets are contributed to the partnership

Salaries

Allowed to partners as compensation for their time devoted in the business

Interest

Allowed to partners for the use of invested capital

Agreed capital

Amount of new capital set by the partners for the partnership

Bonus

An incentive to the managing partner. Usually a percentage of the profit

Agreed capital

Can be determined bu dividing the new partner's contribution by his fraction of interest

Beginning capital

Capital contributions of the partners at the commencement of the partnership

Negative asset revaluation

Decreases the old partnership assets and the capital account of the old partner

Formation of a new partnership

Dissolution by change in ownership structure

Capital contribution

If the partners have not drawn up any agreement, then they must share profits and losses according?

Positive asset reavaluation

Increases the old partnership assets and the capital accounts of the old partners

Capital credit

Interest or equity of a partner in the firm

Total contributed capital

Investment of all the partners, both old and new. Sum of the capital balances

Average capital ratio

Method of dividing profits based on the amount of capital invested and the time during which such capital is actually used in the business

Asset revaluation method

Method which Made to properly value the assets pf the partnership prior to admission of a new partner

Asset revaluation

Necessary adjustment in asset values upon admission of a new partner

Liquidation

Refers to the termination of the business activities carried on by the partnership and the winding up of partnership affairs preparatory to going out business

Dissolution

Refers to the termination of the life of an existing partnership

AC=CC

Situation where there is no asset revaluation nor bonus

Capital account

The account debited for partners' permanent withdrawals of capital

Drawing account

The account debited for the temporary withdrawals of capital

Profit and loss ratio

The basis or ratio in which the profits or losses are shared by the partners

Retired or deceased partner's interest

The capital interest of the partner on date of retirement or death

Dissolution

The change in the relation of the partners caused by any partner ceasing to be associated in the carrying out of the business

Profit

The entire return of from the business ti the partners for their time skill and capital

Capital interest

The equity of a partner in the partnership that is usually expressed in fraction

Capital balance

The interest or equity of a partner in the partnership upon admission

Worksheet

This is prepared in order to classify accounting data in a convenient and orderly manner and to facilitate the preparation of financial statements

True

True or false. Asset revaluation relate only to the partners o the old partnership

Admission by purchase

Type of admission wherein the new partner is admitted by buying the whole interest or a portion thereof of one or more old partners

Bonus method

Under this method, the agreed capitalization of the new partnership is equal to the total amount of contribution of all partners(old and new)

Partnership

a contract whereby 2 or more persons bind themselves to contribute money, property, or industry into common fund with the intention of dividing profits among themselves. (Article 1767 of the Civil Code of the Philippines)

ordinary partnership

actually exist among the partners and has unlimited liability.

universal partnership of all present property

all assets contributed become the common asset of the partnership

mutual agency

any partner may act as agent of the partnership in conducting affairs

universal partnership of all profits

asset contributed do not become the partnership assets

de jure partnership

complied with all the requirements

general Co-partnership

consist of a general partners who have unlimited liability which means their personal assets are liable to the partnership's obligations.

capitalist partner

contributes cash or property

capitalist-industrial partner

contributes cash, property, and industry.

industrial partner

contributes industry, labor, skills, talent, and service.

silent partner

does not participate in managing

open partnership

existence of a partner is made known to the public

secret partnership

existence of a partner is not made known to the public

de facto partnership

failed to comply one or more of the requirements

particular partnership

has for its object determinate things, their use or fruits or a specific vocation or exercise of profession

liquidating partner

in charge of the winding up of the partnership affairs upon dissolution

general partners

liability extends to his personal assets

limited partners

liability is limited only to the extent of his capital contributions

trading partnership

main activity is the manufacture and sale or purchase and sale of goods

partnership by estoppel

no formal partnership agreement was place. A person who exhibits such conduct, or says words which represent or allow him to be represented as partner in any firm becomes liable to any loans or credits that are obtained by the firm.

partnership at will

no term which means can be terminated ANY TIME by mutual agreement of the partners or will of one partner

dormant partner

not active nor known to public.

nominal partner

not really a partner but is made liable for the protection of the real one.

managing partner

partner that manages actively

loan payable

partners may advance money to the partnership which are payable immediately by the partnership

loan receivable

partnership may advance money to the partners which are payable immediately by partners

limited life

partnership may be dissolved at any time by action of the partners or by operation of law.

legal entity

partnership personality is separated and distinct from the partners

income tax

partnerships are subject to 30% income tax; EXCEPT general professional partnership

capital share

percentage of equity that each of them will have in the net assets of the newly formed partnership

unlimited liability

personal assets may be used to satisfy partnership creditors if partnership liabilities aren't enough.

co-ownership of contributed assets

property contributed will be owned by the partnership alone

non-trading partnership

purpose is to render services

fair market value

recorded in the books in the absence of agreed value

face value

recorded in the books when asset contributed is cash

agreed value

recorded in the books when asset is recorded as non-cash or property

memorandum entry

recorded in the books when industry is contributed.

mutual participation in profits

right to share in partnerships profit

secret partner

takes active part but not made known to the public

ostensible partner

takes active part in managing and is publicly known

partnership with a fixed term

term is agreed upon; termination is by expiration of the agreement unless continued by partners.

bonus

the transfer of capital from one partner to another, upon partnership formation, in recognition of intangible factors such as partners' special expertise, established clientele, or necessary business connections.

ltd or "limited"

the word added to the name of the partnership to inform the public that it is a limited partnership

general professional partnership

those organized for the exercise of professions like CPA, doctor, lawyer, engineer and such. And is exempted to the income tax.

goodwill

treatment when the capital credit exceeds the agreed value of the net asset acquired by the new partnership from the old one.

Articles of co-partnership

written agreement between or among the partners governing the formation, operation and dissolution of the partnership.