1.
ACCOUNTING FOR
PARTNERSHIPS

2.
DEFINITION 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. THEY MAY ALSO FORM A
PARTNERSHIP IN THE PRACTICE OF PROFESSION.
IT HAS A JURIDICAL PERSONALITY SEPARATE AND DISTINCT FROM THAT
OF THE OWNERS.
EACH OWNER IS CALLED A PARTNER. IT PROVIDED MEANS OF
OBTAINING MORE EQUITY CAPITAL AND ALLOW SHARING OF RISKS.

3.
CHARACTERISTICS OF A PARTNERSHIP
1. MUTUAL CONTRIBUTION
2. DIVISION OF PROFITS OR LOSSES
3. CO-OWNERSHIP OF CONTRIBUTED CAPITAL
4. MUTUAL AGENCY
5. LIMITED LIFE
6. UNLIMITED LIABILITY
7. INCOME TAXES- 30% professional income
8. PARTNERS’ EQUITY ACCOUNTS

4.
ADVANTAGES OF A PARTNERSHIP
ADVANTAGES OF PARTNERSHIP VERSUS SINGLE PROPRIETORSHIP
1. BRINGS GREATER FINANCIAL CAPABILITY TO THE BUSINESS.
2. COMBINES SPECIAL SKILLS, EXPERTISE & EXPERIENCE OF THE
PARTNERS.
3. OFFERS RELATIVE FREEDOM AND FLEXIBILITY OF ACTION IN
DECISION-MAKING.
ADVANTAGES OF PARTNERSHIP VERSUS CORPORATION
1. EASIER AND LESS EXPENSIVE TO ORGANIZE
2. MORE PERSONAL AND INFORMAL

5.
DISADVANTAGES OF A PARTNERSHIP
1. EASILY DISSOLVED AND THUS UNSTABLE COMPARED TO A
CORPORATION.
2. MUTUAL AGENCY AND UNLIMITED LIABILITY MAY CREATE PERSONAL
OBLIGATIONS TO PARTNERS.
3. LESS EFFECTIVE THAN A CORPORATION IN RAISING LARGE
AMOUNTS OF CAPITAL

6.
PARTNERSHIP DISTINGUISHED FROM A
CORPORATION
1. MANNER OF CREATION
2. NUMBER OF PERSONS
3. COMMENCEMENT OF JURIDICAL PERSONALITY
4. MANAGEMENT
5. EXTENT OF LIABILITY
6. RIGHT OF SUCCESSION
7. TERMS OF EXISTENCE

7.
CLASSIFICATION OF PARTNERSHIPS
1. ACCORDING TO OBJECT
A. UNIVERSAL PARTNERSHIP OF ALL PRESENT PROPERTY.
B. UNIVERSAL PARTNERSHIPS OF PROFITS.
C. PARTICULAR PARTNERSHIP
2. ACCORDING TO LIABILITY
A. GENERAL PARTNERSHIP-UNLIMITED LIABILITY
B. LIMITED PARTNERSHIP- LIMITED LIABILITY
3. ACCORDING TO DURATION
A. PARTNERSHIP WITH A FIXED TERM
B. PARTNERSHIP AT WILL

8.
CLASSIFICATION OF
PARTNERSHIPS
4. ACCORDING TO PURPOSE
A. COMMERCIAL OR TRADING PARTNERSHIP
B. PROFESSIONAL OR NON-TRADING PARTNERSHIP
5. ACCORDING TO LEGALITY OF EXISTENCE
A. DE JURE PARTNERSHIP
B. DE FACTO PARTNERSHIP

9.
KINDS OF PARTNERS
1. GENERAL PARTNER
2. LIMITED PARTNER
3. CAPITALIST PARTNER
4. INDUSTRIAL PARTNER
5. MANAGING PARTNER
6. LIQUIDATING PARTNER
7. DORMANT PARTNER
8. SILENT PARTNER
9. SECRET PARTNER
10.NOMINAL PARTNER OR PARTNER BY ESTOPPEL

10.
ARTICLES OF PARTNERSHIP
1. THE PARTNERSHIP NAME, NATURE, PURPOSE & LOCATION
2. THE NAMES, CITIZENSHIP AND RESIDENCES OF PARTNERS
3. THE DATE OF FORMATION AND THE DURATION OF PARTNERSHIP
4. THE CAPITAL CONTRIBUTION OF EACH PARTNER
5. THE RIGHTS & DUTIES OF EACH PARTNER
6. THE ACCOUNTING PERIOD TO BE ADOPTED, NATURE OF
ACCOUNTING RECORDS & FS
7. THE METHOD OF SHARING PROFITS AND LOSSES
8. THE DRAWINGS OR SALARIES TO BE ALLOWED FOR PARTNERS
9. THE PROVISION FOR ARBITRATION OF DISPUTES, DISSOLUTION &
LIQUIDATION.

11.
OTHER MATTERS
1. SEC REGISTRATION
2. ACCREDITATION TO PRACTICE PUBLIC ACCOUNTANCY
3. PARTNER’S CAPITAL ACCOUNT
4. LOANS RECEIVABLE FROM OR PAYABLE TO PARTNERS