Financial Accounting Assignment 1

Exercise 1-2
Characteristics:
-Mutual Agency - Mutual Participation in Profits
-Voluntary Association - Separate Legal Entity
-Based on Contract - Co-ownership of Contributed Assets
-Limited Life - Income Tax
-Unlimited Liability - Ease of Formation
Characteristic Elements of the contract of a partnership:

- Consensual - Bilateral
- Commutative - Preparatory
- Nominate - Onerous - Principal
Disadvantages of a Partnership:
- It is less stable because of its limited life.
- Unlimited liability of the partners for the debts of the partnership from the point of view of the
partners.
- Every partner has an authority and may act as an agent of the partnership.
- Disagreement might occur when partners have the same level of authority in the management
of the partnership.
- Partners may suffer from the consequence of the negligence or wrong action of other partners.
- The partner can’t easily sell his interest or withdraw from the partnership.
The contents of the Articles of Co-Partnership:

- Name, nature, purpose and location of the business
- Names of the partners indicating whether they are general or limited partners, addresses of the
partners
- Amount of cash, in case of property contribution, indicate the description and the agreed value
of said property to be originally contributed by each partner and any additional contributions
that maybe made by the partners
- Term of existence or duration of the partnership
- Duties and powers of each partner
- Manner of dividing the profits and losses among the partners
- Conditions covering the withdrawals by partners for personal use
- Provisions regarding salaries, interest on partners’ capitals shall be allowed or not
- Manner of keeping the books of accounts, the length of the accounting period, the starting date
and the end
- Provision pertinent to dissolution and liquidation
- Other special provisions and stipulations
The legal requirements for a partnership:
Government Agency Requirements for Certificate Issued

Registration
Securities and Exchange Submit at least 3 possible SEC Certificate
Commission (SEC) business name for
verification and approval
After the release of

the approved business
name fills up the required
SEC registration name and
submit together with the
Articles of Co-Partnership
and pay corresponding fees.
Department of Trade and SEC Certificate Registration of Business
Industry (DTI) Articles of Co-Partnership Name
Social Security System (SSS) Filled SSS Application Form SSS Certificate of
Membership
City or Municipal Hall Filled application form from Mayor’s Business
City/Municipal Office City/Municipal Office Permit(renewal Annually –on
Barangay clearance, or before Jan 20)
community tax
certificate/corporate tax.
Zoning compliance
Fire Certificate –from fire
department
Secure clearance and
computation of taxes, fees
and charges –Treasurer’s
Office
Real Property Tax OR
certification as to No Real
Property, if none –Assessor’s
Office
Submit application together
with all requirements for
verification, sequence
number and approval of
payment –Permit and
Licensing Division
Pay taxes, fees and charges
–Treasurer’s Office
Bureau of Internal Tax Identification Number. BIR Certificate of
Revenue(BIR) SEC Certificate Registration (to be paid
Articles of Co-Partnership Annually)
Books of Accounts Authority to print
documents such as OR, SI
and others.
Exercise 1-3
On January 2, 2021, Jessa and Min agreed to form a partnership which will engage in Car Repairs Services. On the
same day Jessa invested cash amounting to P190,000 and repair equipment costing P180,000 but with a
fair market value of P110,000. Min contributed a parcel of land with a current fair value of P250,000 and additional
cash to equal the investment of Jessa.
Cash 550,000
Jessa, Capital 300,000
Min, Capital 250,000
Cash 190,000
Equipment 110,000
Jessa, Capital 300,000
Investment of Jessa
Cash 190.000
Min, Capital 250,000
Investment of Min

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Exercise 1-2

-Voluntary Association - Separate Legal Entity

-Based on Contract - Co-ownership of Contributed Assets

-Limited Life - Income Tax

-Unlimited Liability - Ease of Formation

Characteristic Elements of the contract of a partnership:

- Nominate - Onerous - Principal

The contents of the Articles of Co-Partnership:

The legal requirements for a partnership:

Government Agency Requirements for Certificate Issued

After the release of

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