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Notes on Partnership
Notes on Partnership
What is Partnership?
Partnership: Persons two or more than two persons when start and run the new a business jointly of there own choice, the persons start they are called partners and the deal is done between the partners is known as partnership.
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. 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.
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. 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 business is known as a working partner and the one who simply invests the money is a sleeping partner.
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