1. Partnership:
When two or more than two persons run a business jointly, they are calledpartners and the deal is known as partnership.
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.
A partner who manages the business is known as a working partner and the one who simply invests the money is a sleeping partner.
