Answered: Maria and Sylvia always wanted to start…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Maria and Sylvia always wanted to start their own restaurant business and be an entrepreneur. as entrepreneurs they must decide whether the business should operate as a general partnership or as a limited partnership. Which is the better choice

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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Two or more persons can share in the ownership and, in certain situations, the administration of a firm through business partnerships. When the business's initial investment is sizably significant or whenever the leadership of the organization is expected to be involved, this type of structure is very prevalent. Entrepreneurs have two options for partnership structures. They consist of limited partnerships and general partnerships.

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