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Partnership

  1. Partnership: When two or more than two persons run a business jointly, they are calledpartnersand the deal is known aspartnership.
  2. Ratio of Divisions of Gains:
    1. When investments of all the partners are for the same time, the gain or loss is distributed among the partners in the ratio of their investments. Suppose A and B invest Rs.xand Rs.yrespectively for a year in a business, then at the end of the year: (A's share of profit) : (B's share of profit) =x:y.
    2. When investments are for different time periods, then equivalent capitals are calculated for a unit of time by taking (capital x number of units of time). Now gain or loss is divided in the ratio of these capitals. Suppose A invests Rs.xforpmonths and B invests Rs.yforqmonths then, (A's share of profit) : (B's share of profit)=xp:yq.
  3. Working and Sleeping Partners: A partner who manages the the business is known as aworking partnerand the one who simply invests the money is asleeping partner.



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