Partnership
- Partnership: When two or more than two persons run a business jointly, they are calledpartnersand the deal is known aspartnership.
- Ratio of Divisions of Gains:
- 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.
- 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.
- 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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