actpaco 1 & 2 - Unit 1 Nature and Formation of a...

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Unit 1 Nature and Formation of a Partnership I. Forms of Business Organizations Based on Ownership There are three basic forms of business organization according to ownership . This classification is based on owner/s investing or putting c a on a business being started. Sole or single proprietorship . When only one person makes the investment. Partnership. When two or more persons agree to operate the business a co-owners under certain conditions. The persons owning this form of business are called partners. Corporation . A body formed and authorized by law to act as a single person although constituted by one or more persons and legally endow e with various rights and duties. This is the more popular form of busine s organization today. Persons who put in capital in a corporation are cal l stockholders. Based on Operations or Activity Business may also be classified according to business operations or ac after the necessary capital has been received from the owner or owners a n the business starts its operations. The purpose for which the business ha s been formed will determine the nature of its activities. Service concern . Businesses engage in the rendering of services to oth e for a fee, like the beauty parlor, law firm, dental clinic, and medical cl i n Merchandising or trading concern . Businesses that are into the buyi n and selling of goods or commodities like the grocery store, drug store a department store. Manufacturing concern . Businesses that are engaged in the processin g products or the conversion of raw materials into finished goods that ar e sold like the furniture factory and shoe factory. A trading or merchand i business differs from a manufacturing concern in that the former buys finished goods, which are ready for sale, while the latter produces or manufactured the goods that it sells. II. Definition and Special Features of a Partnership Marivic Valenzuela-Manalo
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A partnership is a contract whereby two or more persons bind themselves to contribute money, property or industry into a common fund with the intention of dividing the profit among themselves (Article 1767 of the Civil Code of the Philippines). This joint effort may be supported by a partnership agreement known as the Articles of Co- Partnership , which is an agreement in writing among the partners governing the nature and terms of the partnership contract. A written agreement is required when partnership capital is P 3,000 or more in money or in property. The Article of Co-partnership helps to avoid misunderstanding among the partners. The written agreement among the partners governs the formation, operation and dissolution of the partnership and is required to be registered with SEC. The Article of Co-partnership contains the following information:
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This note was uploaded on 09/22/2011 for the course ACCOUNTING 101 taught by Professor during the Spring '11 term at De La Salle University.

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actpaco 1 & 2 - Unit 1 Nature and Formation of a...

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