PLEASE EXPLAIN IN YOUR OWN WORDS

EXPAND, GIVE EXAMPLES TO SUPPORT YOUR ARGUMENTS.

Angenor Damien, a junior accountant, is analyzing a partnership business and making certain inquiries of the company treasurer. Angenor has concluded that the partnership business operations are strong.

Review his list and for each partnership strength and indicate whether you agree or disagree that each statement represents a strength. Provide an argument to support your agreement and disagreement with each Angenors assessment.

EACH OF YOUR ANSWERS SHOULD BE ABOUT TWO PARAGRAPHS LONG.

Partnership Strengths

Prepared by Angenor Damien

1. The partners are longtime friends and the partners determine that a written partnership agreement is not necessary.

2. One characteristic of a partnership is mutual agency which is an advantage in partnership business.

3. The partnership decided not to have a statement of cash flows because the partnership does not value its usefulness.

4. The partnership is not concerned about cash inflows and cash outflows as long as the partnership is profitable. The only financial statement prepared by the partnership is the income statement.

5. Because the partners are friends, the division of income and loss is based on the partners monthly needs.

6. One of the partners is a limited partner and participates in management of the company.

7. All the partners in the partnership agree that the general partners will be granted limited liability because there are no differences in limited and unlimited liability concepts.

8. In case of a bankruptcy of the partnership, the partners agreed to be paid first and creditors will be paid before the sale of partnership assets.

9. The profit and loss ratio are changeable depending on the economy of the country.

10. One of the partners decided to leave the partner and theother partners remaining in partnership received a bonus. Why did some partners receive a bonus, and the departing partner did not is an indication of the strength of the partnership.

INSTRUCTIONS: WRITE A LETTER TO ANGENOR DAMIEN IN RESPONSE TO EACH OF THE ABOVE CONCERNS. PLEASE EXPLAINAND ARGUE THE TRUTHFULNESS OF EACH POINT IN YOUR ANSWERS.