Partnership Theories and Characteristics
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Questions and Answers

What is a defining feature of a limited partnership?

  • There can be no dormant partners.
  • At least one partner must be a general partner. (correct)
  • All partners are actively involved in management.
  • All partners have unlimited liability.

    • Which type of partner actively participates in the business but is not known as a partner?

  • Silent Partner
  • Nominal Partner
  • Dormant Partner
  • Secret Partner (correct)

    • Which of the following reflects a partnership with a fixed term?

  • Partners can dissolve the partnership at any time.
  • Partnership lasts indefinitely until partners disagree.
  • Partners remain associated for a lifetime.
  • It is established for a specific event or undertaking. (correct)

    • What is the primary purpose of registration with local authorities for partnerships?

    <p>To ensure the partnership is recognized legally.</p> Signup and view all the answers

    Which partner serves as a manager but does not hold a formal partnership status?

    <p>Nominal Partner</p> Signup and view all the answers

    What is the main purpose of forming a partnership according to the Civil Code of the Philippines?

    <p>To contribute to a common fund and divide profits</p> Signup and view all the answers

    Which of the following is NOT a characteristic of a partnership?

    <p>Separate legal personality</p> Signup and view all the answers

    How does a partnership generally compare to a corporation in terms of organization?

    <p>Easier and less expensive to organize</p> Signup and view all the answers

    What disadvantage is associated with partnerships that is not seen in corporations?

    <p>Potential for instability and easy dissolution</p> Signup and view all the answers

    What is a key advantage of partnerships over sole proprietorships?

    <p>Greater financial capacity</p> Signup and view all the answers

    Which of the following reflects the relationship between partners in a partnership?

    <p>Based on mutual agency</p> Signup and view all the answers

    What is a common misconception about partnerships compared to corporations?

    <p>They have lower potential for profit.</p> Signup and view all the answers

    Which factor is crucial for determining the equity accounts of partners in a partnership?

    <p>The partner's contribution and agreed terms</p> Signup and view all the answers

    What is a De Jure Partnership?

    <p>A partnership that has fulfilled all legal requirements.</p> Signup and view all the answers

    Which type of partnership is responsible for all liabilities, even beyond their investment?

    <p>General Partner</p> Signup and view all the answers

    In a Universal Partnership of Profits, what do the partners contribute?

    <p>Only profits generated by the partnership.</p> Signup and view all the answers

    Which partner is primarily responsible for managing day-to-day operations?

    <p>Managing Partner</p> Signup and view all the answers

    Which classification of partnership must specify its terms in an agreement?

    <p>Particular Partnership</p> Signup and view all the answers

    What distinguishes a Limited Partner from other types of partners?

    <p>They are liable only up to their investment amount.</p> Signup and view all the answers

    Which type of partnership is considered illegal or unregistered?

    <p>De Facto Partnership</p> Signup and view all the answers

    Who among the following is classified as a Capitalist Partner?

    <p>A partner who invests money or property.</p> Signup and view all the answers

    What is a primary characteristic of partnerships regarding their formation?

    <p>Partnerships can be formed by simple agreement.</p> Signup and view all the answers

    How is ownership of contributed assets treated in a partnership?

    <p>They are co-owned by the partners.</p> Signup and view all the answers

    What can be said about the liability of partners in a partnership?

    <p>Liability is unrestricted and includes personal assets.</p> Signup and view all the answers

    What is one key difference between partnerships and corporations regarding their legal status?

    <p>Partnerships acquire legal personality upon SEC approval.</p> Signup and view all the answers

    What is a notable difference in the management structure between partnerships and corporations?

    <p>Partners in a partnership can both manage or appoint managers.</p> Signup and view all the answers

    Which statement is true regarding the terms of existence for partnerships?

    <p>Partnerships may terminate immediately by partners' decision.</p> Signup and view all the answers

    What is the relationship between partnerships and income taxes?

    <p>Partnerships are subject to a corporate tax, except certain professional partnerships.</p> Signup and view all the answers

    What does the right of succession imply for partnerships compared to corporations?

    <p>Partnerships have no right of succession, while corporations do.</p> Signup and view all the answers

    Study Notes

    Partnership Theories

    • A partnership is a contract where two or more people agree to combine money, property, or skills to share profits.
    • A partnership can also be formed for professional services.
    • A "person" in this context can be a natural person or a juridical entity (like a corporation or another partnership).
    • Partnerships have a separate legal identity from their partners, even if certain requirements aren't met.

    Characteristics of a Partnership

    • Mutual Contribution: Partners contribute money, property, or skills.
    • Division of Profits/Losses: Profits and losses are shared among partners.
    • Co-ownership of Assets: Partners jointly own the contributed assets.
    • Mutual Agency: All partners act as agents for the partnership.
    • Limited Life: Partnerships end when partners decide to dissolve the agreement.
    • Unlimited Liability: Partners are personally liable for partnership debts.
    • Income Taxes: Partnerships are typically taxed differently than corporations (unless they are professional partnerships).

    Advantages of a Partnership (vs. Sole Proprietorship)

    • Greater financial resources.
    • Combined skills, experience, and expertise.
    • Flexibility and freedom in decision-making.

    Advantages of a Partnership (vs. Corporation)

    • Easier and less expensive to form.
    • More informal and personal.

    Disadvantages of a Partnership

    • Easy dissolution, making them unstable compared to corporations.
    • Potential for unlimited liability and mutual agency.
    • Less effective at raising capital compared to corporations.

    Distinguishing Partnerships from Corporations

    • Formation: Partnerships are formed by agreement; Corporations require legal approval from a regulatory body like the SEC.
    • Number of People: Partnerships involve two or more people, but corporations can sometimes involve single individuals.
    • Legal Personality: Partnership's legal personality is dependent on compliance, Corporations have it upon receiving a certificate of incorporation.
    • Management: In partnerships, partners can manage; Corporations are governed by a board of directors.
    • Liability: In partnerships, all partners are liable, whereas in corporations, shareholders have limited liability.

    Partnership Classification

    • By Object:
      • Universal: All present or future property; a division of profits.
      • Particular (or Specific): A specific venture or a division of profits.
    • By Liability: General or Limited which limits liability
    • By Duration: Fixed term or at will.
    • By Purpose: Commercial (trade), Professional (providing services).
    • By Legality: De Jure (lawful) and De Facto (in practice but not formally recognized).

    Other important considerations

    • Terms of Existence: Partnerships can be terminated immediately. Corporations have a set term that is often renewable.
    • Partners' Equity: Each partner has an individual account representing assets/liabilities.

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    Partnership Theories PDF

    Description

    Explore the essential theories and characteristics of partnerships in this quiz. Understand how partnerships are formed, their legal implications, and the mutual responsibilities of partners. Test your knowledge on the aspects that define a partnership, including contributions, profit sharing, and liability.

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