Kayla and Malik set up a business selling and repairing bicycles. They were advised to form a partnership and were told that it was important to draw up a Deed of Partnership. Part of this Deed of Partnership is shown in Fig. 1. Fig. 1 Deed of Partnership DEED OF PARTNERSHIP Between: Kayla Okoye and: Malik Jang Capital: Each partner will contribute initial capital to the value of $20000 Authority: Each partner has equal authority in making decisions Duration: The partnership will end on 30 November 2020, or when more partners join Date: 30 November 2017 Use Fig. 1 to help you answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [2] 1 mark for each piece of information Name of partnership Objectives of partnership Nature of the business Duties/role of each partner Amount of salary to be paid to each partner Conditions for ending the partnership Witnesses Place of business Signatures Share of profits/losses Interest on capital Limited or unlimited liability
2. [3] Up to 3 marks for justified reasoning It is legally binding on the partners (1) acts as proof/evidence (1) can be used in court (1) to prevent fraud (1) partners must act according to the deed of partnership provisions (1) prevents misunderstanding (1) and future disputes (1)
3. [2] 1 mark for each service Warranty/replacement after a period Service/maintenance checks Third party insurance Advice/information hotline Delivery Cleaning service / bicycle wash Instruction manual / guidebook Selling spare parts Refunds/Exchanges Updating of new products Assembling parts
4. Yes, as the business will have 24 hour access (1) when its bank closes, it can still access its account (1) and transact online (1)
5. Yes, as it can access its account from anywhere (1) if the owners are on a business trip or at home (1) they can still keep an eye on the business' money / financial transactions (1)
6. Yes, as conducting business online is generally faster than going to the bank (1) long teller lines can be time-consuming (1)
7. Yes, as many features/services are typically available online (1) e.g. the business can apply for loans/overdrafts (1) without having to go to the bank (1)
8. Yes, as able to setup/view/cancel standing orders / direct debits (1) pay bills (1) and move funds from one account to another (1)
9. Yes, as it's generally secure (1) as the bank's website should have a valid security certificate (1) so the business will be protected from cyber-thieves stealing personal/financial information (1)
10. No, although internet banking is generally secure it is not always secure (1) with identity fraud (1) which can take months to correct the problem, if at all (1)
11. No, customer service can be below the quality expected from personal / face-to-face service (1) as some people simply take comfort in being able to talk to another human being (1) and going through an automated telephone 'menu' can be very irritating (1)
12. No, as not all online transactions are immediate (1) as internet banking is subject to the same business-day parameters as traditional banking (1)
13. No, as there may be internet network failure (1) or the business may be in a very rural area without any, or with limited, access to a network (1)
14. Advantages of a bank loan: paid back in fixed instalments, fixed rate of interest so business can budget for it, bank does not have any ownership control or receive any share of profits
15. Disadvantages of a bank loan: interest has to be paid, can be high, collateral can be lost if loan not repaid, can be difficult to obtain – especially for small/new business – and a long process to receive the money
16. Advantages of another partner: extra capital, additional expertise, share responsibility, share losses
17. Disadvantages of another partner: share profits, share control, possible conflict between partners
18. Evaluation: It depends whether Kayla and Malik have any business assets to sell. This is unlikely as they are in the first year of business. Bank loans are more likely to be given to more established businesses. Recommend increasing capital by taking another partner but will have to be careful who they choose.