2.2 Partnerships

• What is a partnership in business terms?

  A business owned by partners
• Partners in a partnership jointly manage the business operations.


  True
• Match the characteristic of a partnership with its description:

  Ownership ↔️ Two or more partners jointly control the business

  Management ↔️ Partners work together to make decisions

  Profit Sharing ↔️ Profits divided according to a ratio

  Liability ↔️ Unlimited responsibility for debts
• What does the 'nature of the business' term in a partnership agreement specify?

  Type of business activities
• In a partnership, income is taxed as personal income for each partner.


  True
• Partners in a partnership have unlimited liability
• Unlike a sole proprietorship, a partnership involves shared ownership and liability.


  True
• A partnership is formed through a partnership agreement
• Match the characteristic of a partnership with its description:

  Ownership ↔️ Owned by two or more partners

  Management ↔️ Partners jointly manage business operations

  Liability ↔️ Partners have unlimited liability
• Partnerships offer shared ownership, management, and liability, which differentiates them from sole proprietorships.


  True
• Steps in forming a partnership

  1️⃣ Initial planning and agreement

  2️⃣ Drafting a partnership agreement

  3️⃣ Review essential terms in the agreement

  4️⃣ Address legal and financial implications
• Why is a well-defined partnership agreement crucial?

  To avoid disputes
• Match the clause in a partnership agreement with its description:

  Partners' Names and Addresses ↔️ Identifies the partners

  Profit and Loss Sharing ↔️ Divides profits and losses

  Management Responsibilities ↔️ Specifies roles and authority
• In a partnership agreement, capital contributions refer to investments made by each partner
• How is management typically handled in a partnership?

  Jointly by the partners
• All partners in a partnership have equal authority unless specified otherwise in the agreement.


  True
• Which business structure provides limited liability to protect shareholders' personal assets?

  Limited company
• Partnerships are formed through a partnership agreement
• Partners in a partnership have unlimited liability for the business's debts

  True
• A partnership agreement outlines the rights and obligations of each partner
• Match the business structure with its liability type:

  Partnership ↔️ Unlimited

  Limited Company ↔️ Limited
• The nature of the business is one of the essential terms in a partnership agreement


  True
• Capital contributions can be in the form of cash, assets, or expertise
• Capital contributions refer to the initial investments made by each partner to start the business
• The partnership agreement is crucial for ensuring a fair and transparent arrangement regarding capital contributions and profit/loss sharing.


  True
• Major business decisions in a partnership require agreement from all partners
• In a partnership, all partners have equal authority unless otherwise specified in the agreement.


  True
• What is an advantage of unlimited liability in a partnership?

  Encourages cautious financial management
• The dissolution of a partnership refers to the termination of the partnership business.


  True
• What is the first step in the dissolution process of a partnership?

  Settling outstanding debts
• In a partnership, management is joint, whereas in a sole proprietorship, it is single.
• In a partnership, partners have unlimited liability
• How are profits and losses shared among partners in a partnership?

  Pre-agreed ratio
• Steps in forming a partnership

  1️⃣ Initial Planning and Agreement

  2️⃣ Drafting a Partnership Agreement

  3️⃣ Legal and Financial Implications
• A partnership agreement must include the names and addresses of all partners
• What is the purpose of a partnership agreement?

  Outlines partners' rights
• What do partners in a partnership collaborate on in terms of management?

  Business operations
• What is a partnership in business terms?

  Owned by two or more partners
• A partnership shares ownership, responsibilities, and liability, unlike a sole proprietorship.


  True
• In a partnership, profits and losses are shared according to a pre-agreed ratio