What is Partnership?
When a business is run jointly by two or more than two persons then they are called partners and the deal partnership.
Ratio of division of gains/loss
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. x and Rs. y respectively 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. x for p months and B invests Rs. y for q months then,
(A's share of profit) : (B's share of profit)= xp : yq.
Working Partner and Sleeping Partner
A partner who manages the business is known as the Working Partner and the person who simply invests the money is known as the Sleeping Partner.
Click here for Online Test on Partnership
When a business is run jointly by two or more than two persons then they are called partners and the deal partnership.
Ratio of division of gains/loss
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. x and Rs. y respectively 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. x for p months and B invests Rs. y for q months then,
(A's share of profit) : (B's share of profit)= xp : yq.
Working Partner and Sleeping Partner
A partner who manages the business is known as the Working Partner and the person who simply invests the money is known as the Sleeping Partner.
Click here for Online Test on Partnership
