Arithmatical - Partnership

CATEGORY

Important Facts and Formulas
1. Partnership :

When two or more than two persons run a business jointly, they are called partners and the deal is known as partnership.
2.

Ratio of Divisions of Gains :

I. 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.


II. 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.
3. Working and Sleeping Partners :

A partner who manages the the business is known as a working partner and the one who simply invests the money is a sleeping partner.