Answered: What will you tell them?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

A, B, C, D, and E wants to create a partnership. A promised to contribute his jewelries. B will contribute his jewelry cases worth P500,000.00. C, D, and E promised to contribute P100,000.00 each. They come to you to ask you for guidance. They want to know if their agreements as to their contribution is enough to create a valid partnership. What will you tell them?

a. They are not correct because they are forming a corporation with the contributions that they agreed.

b. They are correct because a partnership is a consensual contract.

c. They are not correct because they are required to execute a public instrument.

d. They are correct because their presence before the Securities and Exchange Commission is enough.

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.

Expert Solution

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions