NAME

: Laiba Malik

SUBJECT

: Financial Accounting I

CLASS

: BBA-II-C

ROLL NO

: 9191089

TOPIC

: Assignment on Partnership Chapter

SUBMITTED TO

: Mr. Waris Ali

Question1: Define Business.

Answer: The organized effort of people to produce and sell goods and services at
profit that satisfy target markets needs. It is the activity of earning money by
buying and selling goods and services.
Every business needs some kind of investment and target market to whom its
products and services can be sold on daily basis in order to make profit.
Businesses can be of different sorts: such as privately owned and state owned.

Question 2: Explain different types of business.

Answer: Business owners decide very carefully what kind of business they should
choose because of different issues and concerns: legal issues, tax issues, financial
concerns, and personal concerns.

Types of Business:

There are three types of businesses.

1. Sole proprietorship
2. Partnership
3. Corporation

Sole Proprietorship:

The sole proprietorship is the simplest type of business in which only one person
operates a business, provides all the capital, design and manage things inside
organization. It is not a legal entity and simply refers to a person who owns the
organization and he/she is personally responsible for its debts. It ends with death of
owner of organization.
Partnership:

Partnership is the type of business in which two or more partners (partners can be 2
from 20) operate a business, provides all the capital, design and manage things
inside organization. Partnership is legal entity and partners are responsible for
paying organizations debts according to their investment. It ends when one share
holder dies or leaves organization.

Corporation:

Corporation is type of business which is legally considered as an entity separate

from its owners, it is liable for its own debts, owners liability extends to the limit
of their investments in organization. It is owned by share holders and they elect
board of directors. This type of organizations last for specified period of time to
carry out business activities.

Question 3: Explain partnership in detail and give three examples.

Answer: Partnership is a legal type of business operation between two or more

individuals (partners can be 2 from 20) who share management of organization and
profits.

Partnership includes many partners and some of them have limited participation
and also limited liability for the businesses debts and proper formal agreement. It is
similar to a sole proprietorship because in both types business is not separate from
the owners for purpose of liability. In partnership owners do not have to pay
income tax. Every partner pays tax individually from their portion of profit.

Types of Partnership:

The two most common types of partnership,

 1. General partnership
2. Limited partnership

General Partnership:

General partnership is the type of partnership in which partners manage the

company and are given proper responsibility for the partnerships debts and other
obligations.

Limited Partnership:

A limited partnership is a type of partnership which has both general and limited
partners. The general partners own and operate the business and are responsible for
paying liability for the partnership. On the other hand the limited partners work as
investors. They have no control over the company and general partners provide
them all information related to organizational activities.

Joint Ventures:

Joint venture is also a type of partnership which brings multiple partners together
for a project. If the joint venture’s working is well then it can be continued as a
general partnership or it can be ended.

Advantages of Partnership:

1. It contains two or more investors or partners which are better than one.
2. Partnership business is easy to start and start up costs is low as compared to
other business types.
3. As many partners more is the capital available for the business purposes.
4. Banks and firms easily lend money to partnership business so partners have
greater borrowing capacity.
 5. In partnership high caliber employees can be made partners by investing
money in business activities.
6. In partnership there is opportunity for income splitting and tax savings.
7. In partnership partners business affairs are confidential.
8. In partnership there is limited political or legal regulation.
9. In partnership it’s easy to change legal structure if circumstances change
within organization.

Disadvantages of Partnership:

1. In partnership the liability of the partners for the debts of the business is
unlimited they have to pay all the loans and debts if company is sealed.
2. Each partner within organization is liable for the partnership’s debts
according to their share in investment.
3. In partnership there is a risk of disagreements, conflicts and friction among
partners and other management.
4. Each partner in partnership is an agent of the partnership and held
responsible for actions and deeds done by other partners.
5. In partnership if partners join or leave the organization, other partners
probably have to value all the partnership assets and this is very costly.

Examples:

1. Peer Polytex Company

It is a partnership company, located in Korangi Karachi and they manufacture

Metallic Yarn, Covering Yarn, Twisted Yarn, and Cotton Yarn. They import raw
material like metalized Polyester, Film Yarn and Grade from Korea, China, India
and UAE. All of their plants and machines are imported from Korea. Their brand
name is PEEREX. Logo: We believe in quality work and productions.
 2. Seemco Cotton Trading

It started in 1952 in Pakistan with the name of SEEMCO, when it was a small
brokerage Agency and now they do import as well as export Cotton Yarn and
related goods including raw cotton. They are in partnership with some textile mills
and Cotton waste companies. They act as natural brokers between two parties.
Located in Chundrigar Road Karachi Sindh 74000.

3. Ennoble International Pvt Ltd

It is leading Custom team Uniforms Manufacturer in Pakistan. It’s our aim to

manufacture high quality team uniforms at cheap prices. They are specialized in
making Basketball, American Football, Baseball, Martial Art Uniforms,
Tracksuits, Softball Kits and much more. Ennoble offer immense selection of
styles, fabric, colors and design with wide variety.