IGCSE, A Level Business Student Forum

Q15 Analyse any two ingredients of a partnership agreement. What benefit the business would have of these terms.[4]

Possible Structure:
[KN]
[AN]

[KN]
[AN]

(kn) workload
(an) when workload is equal their will be a sense of equality and good competitiveness
(an+) encouraging them to work more and get decisions done quickly
(kn)allocation
(an) whatever profit and loss is made should be distributed equally between them
(an+) leaving no misunderstandings and good financial position

[KN] Profit and loss Ratio
[AN] It tells how profit and loss will be shared among partners. This may be based on the percentage of ownership.

[KN] Decision Making
[AN] Describe the decision-making process within the partnership, including who has the authority to make decisions and how major decisions will be reached.

[KN]profit and loss ratio
[AN]this shows how much each partner recieves and so in the future it reduces chances of conflict

[KN]interest on capital
[AN]this encourages investment to be made as it benefits the investor

[KN] Roles and responsibilities.
[AN] It helps them to realize what they have to do so there is lesser time taken in decision making as they are aware of their own work

[KN] Arbitrator or a Negotiator.
[AN] Sometimes a person is decided by the parties who help them resolve their misunderstandings and conflicts.

(Kn) profit sharing (an) it tells the exact ratio in which the profits will be divided among the partners

(Kn)interest on drawings (an) this tells the amount of money to be charged if drawings are done by partners to discourage such an act

[KN] Profit and Loss sharing
[AN] Profit and loss of the company is divided among the partners of the firm.

[KN] Roles and Responsibilities
[AN] Partnership agreement also contains the roles and responsibilities which contains all the necessary things such as Promoting, Advertisements etc

[KN] Profit and loss sharing.
[AN] This shows how the profit and loss will be shared among the partners.

[KN] Decision making.
[AN] This shows how the decision is made among the partners.

[KN] profit shared
[AN] the amount of profit shared between the both partners

[KN] interest on drawing
[AN] the amount paid to the business on doing drawings by the both partners

[KN] Sharing of total profit and loss.
[AN] Thus this results in even distribution of both and one does not bear or enjoy any one of these.

[KN] Responsibilities.
[AN] Partnership term refers to share of everything hence responsibilities too which means one is not overburdened with it.

[kn] taking responsibilities of different roles in the business
[an] once an agreement is made each partner has there own role and this includes details about the amount of time each partner is suppose to devote to the business
[kn] profit and loss is shared
[an] therefore results in even distribution of both and one doesn't bear or enjoy any one of these

[KN]Profit sharing ratio between partners
[AN]A partnership agreement must show the method of profit sharing i.e whether it is shared according to the return on capital investment made by each partner or any set terms and conditions eg the one who works more may receive greater share

[KN]Decision making control
[AN] A partnership agreement must show the authorities of both partners to avoid conflicts and makes decision making processes more smoother

[KN]Decision making control
[AN] A partnership agreement must show the authorities of both partners to avoid conflicts and makes decision making processes more smoother
[KN]Profit sharing ratio between partners
[AN]A partnership agreement must show the method of profit sharing i.e whether it is shared according to the return on capital investment made by each partner or any set terms and conditions eg the one who works more may receive greater share

] Sharing of Profit and Loss [
AN] It specifies how partners will split profits and losses. The percentage of ownership could be the basis for this.

KN]Control of decision-making
 [AN] To prevent disputes and facilitate decision-making, a partnership agreement must clearly outline each partner's authority.

(KN) Sharing of profit and loss
(AN) This ingredient allows the partners to get a percentage share of the profit that the business makes according to the ownership of the partner.

(KN) Decision making
(AN) This ingredient allows the partners to make important decisions for the business more smoothly as there are no conflicts between them according to the agreement.