Neco Model Questions Vol1 2023 Commerce Question 7

Practice essay / theory question 7 from the 2023 Neco Model Questions Vol1 Commerce examination. This question covers Business Organizations, Partnership, Private Limited Company, Capitalisation .

Neco Model Questions Vol1 2023 Commerce Essay / Theory
Topics: Business Organizations Partnership Private Limited Company Capitalisation
Question 7 NECO_MODEL_QUESTIONS_VOL1 • 2023 • COMMERCE • essay

Alpha Traders is a partnership of three persons: Mr. A, Ms. B and Mr. C. They have been operating a wholesale business for 5 years. The partnership agreement states that profits are to be shared in the ratio of 3:2:1 respectively. The partnership has total assets of ₦4,200,000 and total liabilities of ₦1,500,000. The partners are considering converting the business into a private limited liability company (Ltd).

Question Parts

( a )
Calculate the net assets of the partnership and state the amount of capital each partner would be entitled to if the business is converted on a basis of net assets.
( b )
Discuss at least three advantages and three disadvantages of converting the partnership into a private limited company, referring to legal, financial and managerial aspects.
( c )
Assuming the new Ltd company issues ordinary shares to the three former partners in proportion to the capital determined in part (a), and each share has a par value of ₦100, explain how the share capital will be allocated among the partners and state the number of shares each will receive. (Include any rounding considerations.)

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About This Question

This is Neco Model Questions Vol1 2023 Commerce Question 7. It is one of the essay questions from the 2023 Neco Model Questions Vol1 Commerce examination.

The question covers Business Organizations, Partnership, Private Limited Company, Capitalisation .

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