Exercise 1: Discussion Questions

1. Define partnership.
2. Enumerate and discuss are the essential characteristics of a partnership.
3. Differentiate sole proprietorship from partnership.
4. Discuss the advantages and disadvantages of forming a partnership.
5. How do dormant, secret and silent differ from one another?

Exercise 2: Modified True or False

Instructions: Write T if the statement is true and F if the statement is false.
1. A written partnership contract is required to be prepared whenever a partnership is formed.
2. All partnerships are subject to income tax.
3. A person’s contribution in the form of industry or service is not a partner.
4. A partnership is much easier and less expensive to organize than a corporation.
5. All partnerships have at least one general partner.
6. Each partner generally has the authority to enter into contracts which are binding upon the
partnership.
7. The property invested in a partnership by a partner becomes the property of the partnership.
8. The unlimited liability of partners for partnership debts make the partnership more reliable from
the point of view of creditors.
9. Before a partnership can operate legally, it has to first comply with registration requirements of the
SEC, DTI, BIR, SSS, and Mayor’s Office.
10. There is a required number of limited partners in a general co-partnership; in the same manner
that, there is a required number of general partners in a limited partnership.
11. A partnership is always owned by two individuals.
12. Partners are personally liable for the liabilities of the partnership if the partnership is unable to pay.
13. Heirs of undivided property are partners.
14. All partnerships may be formed by oral contract.
15. Industrial partners are limited partners.
16. The partner investing a particular kind of asset retains his personal rights to the said property. He
may receive back the same property if the partnership is terminated.
17. The sharing of profit is usually arrived at by mutual consent; otherwise, a partnership’s profit and
losses are shared according to their capital contribution.
18. A partnership has no power of succession.
19. A partnership is not considered as a separate entity from the partners when it involves debts to
third party creditors.
20. A capitalist-industrial partner could be a limited partner as to liability.