Financial Accounting and Reporting

Partnership - A contract whereby two or more persons bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves. Article 1787

Partnership Law - A partnership is governed by this law.

Articles of Co-Partnership. - A written agreement which will govern the formation, operation and dissolution of the partnership.

Mutual Agency - In the partnership, there are two or more partners and each of them may act as an agent of the partnership for the operation of its business.

Voluntary Association - He is willing to be associated in the partnership. No one can be forced against his wil l to become a partner in a partnership.

Based On Contract - In the formation of a partnership, it is required that two or more persons agree to bind themselves to become partners of a partnership. Their agreement whether oral or in writing becomes a contract that binds them.

Limited Life - A partnership has a limited life because it may be dissolved at any time by the will of the partners or by operation of the law. The life of the partnership is dependent upon the lives and the will of the partners.

Unlimited Liability - The liability of the partners extends beyond their interest in the partnership.

Mutual Participation in Profits - Each partner has the right to share in the profits of the partnership. The profits will be divided in accordance with the agreement stipulated in the articles of co-partnership.

Separate Legal Entity - A partnership has a legal entity separate and distinct from that of every partner or owner.

Co-ownership of Contributed Assets - All the properties contributed by the partners to the partnership are owned by the partnership by virtue of its separate legal entity.

Income Tax - Partnership is suited to the practice or exercise of profession. General Professional Partnerships are exempted from income tax.

Ease Of Formation - The partnership may be created by oral or in written agreement between two or more individuals. Lesser documents than a corporation.

Trading Partnership - one which the main activity is buying and selling of goods or manufacturing of goods.

Non Trading Partnership - one which is organized for a specific purpose or project or for rendering services .

General Partnership - A partnership wherein all of the partners are general partners. They are all personally liable for the debts of the partnership.

Limited Liability - A partnership formed by one or more general partners with one or more limited partners. There must be at least one general partne r who will assume the unlimited liability of the partnership.

Universal partnership - May refer to all the present property or to all the profits.

Particular Partnership - One which has for its object determinate things, their use or fruits, or a specific undertaking, or exercise of a profession or vocation.

Partnership at will - one which has no time specified and may be terminated at anytime by the will of either one or all of the partners or by mutual agreement of the partners.

Partnership with a fixed term - One which the term or period of existence of the partnership is specified.

Ordinary Partnership - One which is in reality existing among the partners as well as to the third parties.

Partnership by Estoppel - One which is in reality not a partnership but considered as a partnership only in relatio n to those who by their conduct or omission are precluded to deny or disapprove its existence.

De Jure Partnership - One which has complied with all the legal requirements for its existence.

De Facto Partnership - One which has not complied with all the legal requirements for its existence.

Secret Partnership - One wherein the existence of certain partners is not made known to the public by any of the partners.

Open Partnership - One whose existence is made known to the public by the partners of the firm.

Consensual - Is perfected by mere consent, that is, upon the express or implied agreement of two or more persons.

Nominate - has a special name or designation in our law

Bilateral - it is entered into by two or more persons and the rights and obligations arising there from are always reciprocal

Onerous - each of the parties aspires to procure for himself a benefit through the giving of something

Commutative - The undertaking of each of the partner is considered as the equivalent of that of the others.

Principal - it does not depend for its existence or validity upon some other contract. It can stand alone.

Preparatory - it is entered into as a means to an end

Article 1818 - A partnership contract, in its essence, is a contract of agency

General Partner - Is the one who assumes unlimited liability . He is liable for the debts of the partnership up to the extent of his personal assets.

Limited partner - Is the one whose liability for the debts of the partnership is only up to the extent of his interest in the partnership. His liability is limited.

Capitalist Partner - is the one whose contributions to the partnership are in the form of money or property .

Industrial Partner - Is the one whose contribution to the partnership is his labor, industry, skill, talent or professional services.

Managing Partner - is designated to manage the affairs or business operations of the partnership.

Silent Partner - has financial interest in the firm but does not take active part in the business although he may be known to the public as a partner.

Liquidating Partner - is in charge of the winding up of the partnership affairs in case of dissolution.

Ostensible Partner - takes active part in the partnership and known to the public as a partner in the partnership whether or not he has an actual interest in the firm

Nominal Partner - is not really a partner having no financial interest in the partnership nor a party to the agreement of the partnership, but represented as being in fact a partner and make liable as a partner.

Secret Partner - has financial interest in the firm and takes active part in the business but he is not known to the public as a partner.

Dormant Partner - does not take active part in the management and is not known to the public as a partner.