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Discussion Forum week 8
Basic Accounting (University of the People)
Studocu is not sponsored or endorsed by any college or university
Discussion Forum week 8
Basic Accounting (University of the People)
Downloaded by Joseph Muriithi (prince.muriithi.jm@gmail.com)
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This week's discussion is based on the following scenario. Read the scenario and answer
both questions in the Discussion Assignment forum.
Scenario: Sports Memorabilia Store
Farah and David decide to form a sports memorabilia retail partnership. They have known
each other since business graduate school and have always worked well together on
various projects. The business is doing well but cash flow is very tight. Farah takes
several calls from vendors asking for payment. He believed David had been paying the
bills. When he asks about this, David admits to embezzling from the partnership.
What liability does Farah face as a result of the theft?
Are you for or against a partnership? Please explain.
Your Discussion should be a minimum of 250 words in length and not more than 450
words. Please include a word count. Following the APA standard, use references and in-
text citations for the textbook and any other sources.
There are several types of partnership: general, limited partnership (LP), and limited liability
partnership (LLP). All of the partnership types have advantages and disadvantages also different
mechanics.
The assignment does not really state what type of partnership Farah and David formed, I will try
to cover all possibilities. If their partnership is general, all partners have personal and equal
liabilities. if there is any debt, both partners are liable (Korchak, 2017). Therefore, even though it
was David's liability to make repayments, Farah is also liable and must repay the whole debt.
I am not certain what kind of partner Farah is, but as soon as she receives calls from vendors,
that she is a general partner. If so, Farah is liable for this debt and must repay the debt as soon
as possible.
If she is a limited partner, then she has a liability that is limited by her initial investment which can
not be exceeded by the debt.
In the case of the LLP (limited liability partnership), Farah's liabilities are also limited by her initial
investment. The good thing is that "creditors cannot go after a partner's personal assets or
income." (Beattie, 2020).
As a result, Farah is facing a disturbing situation where she is liable to pay the debt or for a part
of it.
Although Farah and David knew each other for a long time and worked together on different
projects, there must have been a revising mechanism in the company, which would prevent such
malpractice of partnership.
The partnership mechanics means responsibility to each other, they should check things and
validate books and registers, this will result in healthy business practice. I would suggest the LLP
type of partnership because it seems the safest choice; it is safer, more formal and it has several
advantages. such as the ability to let partners in and out, flexibility, and partners can lose assets
in the partnership, but not outside of it
Word count: 324
References
-Andrew Beattie. (September 25, 2020). Limited Liability Partnership (LLP): The Basics.
Retrieved from https://www.investopedia.com/articles/investing/090214/limitedliability-
partnership-llp-basics.asp
Downloaded by Joseph Muriithi (prince.muriithi.jm@gmail.com)
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-Johnathan Korchak. (August 24, 2017). What is a general partnership? Retrieved from
https://www.informdirect.co.uk/business-management/general-partnership-uk-what-is-it/
Downloaded by Joseph Muriithi (prince.muriithi.jm@gmail.com)
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Due Jan 4, 2025 11:59pm
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Discussion - What is the role of ethics in accounting?
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TIF 12-2
Issuing Stock
1.
ETHICS Lou Hoskins and Shirley Crothers are
organizing Red Lodge Metals Unlimited Inc. to
undertake a high-risk gold mining venture in Canada.
Lou and Shirley tentatively plan to request
authorization for 400,000,000 shares of common
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Theorrect
Mark0.00 out of
2.00
Flag
question
a. $134,000
b. None of the given answers
C. $40,000
d. $104,000
e. $194,000
The correct answer is: $104,000
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