QUALIFYING EXAMINATION PART 1
(Notes and Guide)
Partnership Accounting
Formation:
A contract of partnership is consensual. It is created by the agreement of the partners
which may be constituted in any form, such as oral or written.
However, Articles 1771 and 1772 of the Philippine Civil Code require that a partnership
agreement must be made in a public instrument and recorded with the SEC when: a. immovable
property; or b. capital of 3,000 or more.
Article 1773 further requires an inventory of any immovable property contributed to the
partnership, signed by the parties and attached to the public instrument , otherwise the
partnership is deemed void.
A partnership’s legal existence begins from the execution of the contract, unless
otherwise stipulated.
For illustration, refer to Chapter 1 – Page 6-14
Operations:
Division of profits and losses
The partners share in partnership P/L in accordance with their partnership
agreement.
Remember:
If there is an agreement – losses shall be in the same proportion
In the absence of stipulation – P/L shall be in proportion to what he may have
contributed.
P/L Allocation (Sequence manner)
Salaries, Bonus (if there is profit), and Interest on capital, if these are stipulated;
and
Any remaining amount is allocated based on the P/L ratio.
For illustration, refer to Chapter 2 – Page 27-43
Dissolution
Dissolution is the change in the relation of the partners caused by any partner ceasing to
be associated in the carrying on of the business.
(Notes and Guide)
Partnership Accounting
Formation:
A contract of partnership is consensual. It is created by the agreement of the partners
which may be constituted in any form, such as oral or written.
However, Articles 1771 and 1772 of the Philippine Civil Code require that a partnership
agreement must be made in a public instrument and recorded with the SEC when: a. immovable
property; or b. capital of 3,000 or more.
Article 1773 further requires an inventory of any immovable property contributed to the
partnership, signed by the parties and attached to the public instrument , otherwise the
partnership is deemed void.
A partnership’s legal existence begins from the execution of the contract, unless
otherwise stipulated.
For illustration, refer to Chapter 1 – Page 6-14
Operations:
Division of profits and losses
The partners share in partnership P/L in accordance with their partnership
agreement.
Remember:
If there is an agreement – losses shall be in the same proportion
In the absence of stipulation – P/L shall be in proportion to what he may have
contributed.
P/L Allocation (Sequence manner)
Salaries, Bonus (if there is profit), and Interest on capital, if these are stipulated;
and
Any remaining amount is allocated based on the P/L ratio.
For illustration, refer to Chapter 2 – Page 27-43
Dissolution
Dissolution is the change in the relation of the partners caused by any partner ceasing to
be associated in the carrying on of the business.
