Gce Model Questions Vol1 2021 Commerce Question 7

Practice essay / theory question 7 from the 2021 Gce Model Questions Vol1 Commerce examination. This question covers Business Organizations .

Gce Model Questions Vol1 2021 Commerce Essay / Theory
Topic: Business Organizations
Question 7 GCE_MODEL_QUESTIONS_VOL1 • 2021 • COMMERCE • essay

A group of three entrepreneurs intend to start a manufacturing business that will produce household appliances. They are considering whether to register the business as a partnership or as a private limited company.

Question Parts

( a )
Define the key characteristics of a partnership and of a private limited company.
( b )
Discuss three advantages and three disadvantages of each form of organisation for a start‑up manufacturing firm.
( c )
The partners project a profit before tax of ₦2,400,000 for the first year. They agree to retain 10 % of this profit for future investment and to distribute the remaining profit in the ratio of the capital each partner contributes: Partner A – ₦800,000, Partner B – ₦500,000, Partner C – ₦300,000. In a partnership each partner pays personal income tax at 20 % on his/her share of profit. Calculate: i. The amount retained by the partnership. ii. The profit share of each partner before tax. iii. The tax payable by each partner. iv. The net profit each partner receives after tax.
( d )
Based on the calculations in part (c) and the discussion in parts (a) and (b), recommend which form of business organisation is most appropriate for the start‑up and justify your recommendation.

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About This Question

This is Gce Model Questions Vol1 2021 Commerce Question 7. It is one of the essay questions from the 2021 Gce Model Questions Vol1 Commerce examination.

The question covers Business Organizations .

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