Question 2
Femi and Kunle joined their businesses to form a partnership.
(a) State five provisions they would have in their partnership deed.
(b) Explain five benefits they would likely enjoy in the partnership business
Observation
Most candidates who attempted this question performed very well.
The expected responses to the question include:
(a). Provisions in the Partnership Deed
- i. The name of the partnership should be stated.
ii. The name of the partnership should be stated.
iii. The names of the partners should be written.
iv. The nature/objectives of the business should be included in the partnership deed.
v. Management of the business (duties, powers and obligation of partners) must be clearly stated.
vi. Capital contribution of each partner must be stated.
vii. Ratio of sharing profit and loss must be indicated.
viii. Duration of the partnership must be specified in the deed.
ix. Drawing rights and interest payable should be stated in the deed.
x. Loans obtained from members and interest payable must be stated.
xi. The appropriate procedure for dissolution (death and bankruptcy of a member) must be mentioned.
xii. Guidelines for admission of new partners must be stated.
xiii. Remuneration/salaries of partners should be indicated.
xiv. Procedures for settling disputes among partners should be specified.
(b). Benefits to be derived from the Partnership by Kunle and Yemi
- i. They will enjoy the benefit of division of labour which will lead to specialization and efficiency.
ii. Their liabilities as partners would reduce in case of losses.
iii. The business can continue even if one of the partners is not around
iv. Both partners will share ideas leading to better decisions to the advantage of the business.
v. More capital will be contributed to the business by the partners.
vi. They will enjoy privacy in their business.
vii. They would enjoy greater expansion in their business.