PACOAC PARTNERSHIP THEORIES

• Partnership is an organization where two or more persons bind themselves to contribute money, property, or industry into a common fund with the intention of dividing the profits among themselves.
• II- ELEMENTS OF A PARTNERSHIP: 1. There must be a valid contract, whether oral or written. 2. A partnership must be put up by persons having legal capacity to contract. 3. Their contributions must be in the form of money, property or service. 4. The purpose of the business is to divide the profit among them.
• Mutual Contribution means there cannot be a partnership without contribution of money, property or industry.
• Co-Ownership of Contributed Assets means all assets contributed into the partnership are owned by the partnership by the virtue of its separate and distinct juridical personality.
• Legal Entity mean it has a juridical personality separate and distinct from the partners.
• Legal Entity mean it has a juridical personality separate and distinct from the partners.
• Mutual Agency means any partner can bind the other partners to a contract if he is acting within his express or implied authority.
• Division of Profits or Losses- The essence of partnership is that each partner must share in the profits or losses of the venture.
• Taxable Entity- The income of an ordinary partnership is taxable like a corporation at a rate of 30%. Exempted from tax is a general professional partnership.
• Limited Life means It can easily be dissolved or terminated with the mere withdrawal, incapacity or death of a partner, admission of a new partner or expiration of the term specified in the partnership contract.
• Unlimited Liability- All partners (except limited partners), including industrial partners, are personally liable for all debts incurred by the partnership. If the partnership cannot settle its obligations, creditors’ claims will be satisfied from the personal assets of the partners without prejudice to the rights of the separate creditors of the partners.
• General Partnership- All partners are liable to the extent of their separate properties.

  B. Limited Partnership- It is composed of at least one general partner with the others as limited partners who are liable to the partnership creditors only to the extent of their investment in the partnership.
• As to property: A. Universal Partnership of Property – it is one where the partners contribute all their properties into a common fund. B. Universal Partnership of Profits- it is one where the partners contribute what they will receive as a result of their work or service rendered during the lifetime of the partnership. The partners retain ownership over their present or future property.
• As to duration: A. Partnership with a fixed term or for a particular undertaking. B. Partnership at will. One in with no term is specified and is not formed for any particular undertaking.
• As to legality of existence: A. De jure partnership. One which has complied with all the legal requirements for its establishment. B. De facto partnership. One which has failed to comply with all the legal requirements for its establishment.
• A general partner is one who manages the partnership, contributes property or service and has unlimited liability.
• Limited partner is one who invests cash or property and is liable only to the extent of his capital contribution. He is not allowed to contribute industry or service only.
• A capitalist partner is one who contributes money or property into the partnership fund.
• Industrial partner is one who contributes industry or service only.
• Nominal partner or partner by estoppel is one who actually not a partner but who represent himself as one.
• Secret partner is one who is not known as such to the public.
• Managing partner is one whom the partners appointed as manager of the partnership.
• Liquidating partner is one who is designated to wind up or settle the affairs of the partnership after dissolution.
• Partner’s Capital Account shall be credited for the following transactions: 1. Original investment 2. Additional investment 3. Credit balance of the drawing account at the end of the period.
• Partner’s Capital Account shall be debited for the following transactions: 1. Permanent withdrawals 2. Debit balance of the drawing account at the end of the period
• PARTNER’S DRAWING ACCOUNT: 1. Partner’s Drawing Account shall be credited for the share in profits (this may be credited directly to Capital). 2. Partner’s Drawing Account shall be debited for temporary withdrawals and share in loss (this loss may be debited directly to Capital).
• 1. Loan Receivable – If a partner withdraws a substantial amount of money with the intention of repaying it. 2. Loan Payable- A partner may lend amounts to the partnership in excess of his intended permanent investment.
• 1. Loan Receivable – If a partner withdraws a substantial amount of money with the intention of repaying it. 2. Loan Payable- A partner may lend amounts to the partnership in excess of his intended permanent investment.