FA 2 - PRELIM

• nature of business are trading partnership and non-trading partnership
• as to purpose are commercial partnership and general professional partnership
• trading partnership is engaged in merchandising and manufacturing
• non-trading partnership is engaged in service-oriented business
• commercial partnership is engaged in business in term of merchandising, manufacturing, or other service activity
• the major accounting issues relate to forming the partnership, dividing income or loss, and preparing financial statements, dissolution and liquidation.
• accounts in partnership that differ from proprietorship are Partners’ capital accounts, Partners’ drawing accounts, Loans receivable from partners, Loans payable to partners
• that the partnership is in need of financing, the partners may extend loan to thepartnership aside from their capital contribution. In this case, the partners becamecreditors and the partnership will pay its debt to the partners usually with interest. The account is called Loans Payable or Due to partners.
• The partner may also borrow money from the partnership and with interest aside from his temporary withdrawal from his capital.These loans will be paid by the partners. The account is called Loans Receivable or Due from partners.
• Fair Market Value is the Probable price at which a willing buyer will buy from a willing seller when (1) both are unrelated, (2) know the relevant facts, (3) neither is under any compulsion to buy or sell, and (4) all rights and benefit inherent in(or attributable to) the item must have been included in the transfer.
• In case the fair market value of property contributed is not known the net book value is to be recorded.
• Article 1816 of the New Civil Code provides that the industrial partner like a general partner shall be liable for partnership debts up to the extent of his personal assets.
• Partnership at will It has no fixed period of existence.
• Partnership with a fixed term It is formed with a specific period of existence.
• Managing partner Appointed to manage the business of the partnership.
• Silent partner Does not participate in the management of thebusiness of the partnership.