Important Concepts of Partnership

Let say two or more persons set up a business, these two or more persons will be called partners and the deal among them will be called as Partnership.

Working Partner – A partner who manages the business is called a Working Partner.

Sleeping Partner – The partner who simply invests the money is called Sleeping Partner.

 Ratio of the Division of Gains –

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  • When the investment is made for the same time period by all the partners, the gain or loss is distributed in the ratio of their investments.

Example- Let A invests Rs. X and B invests Rs. Y for 1 year. Then at the end of the year

(A’s share of Profit) : (B’s share of Profit) = x : y

  • When the Investment is made for different time periods, then the equivalent capital is calculated first for a unit time. (Capital × No. of Unit time)

Example- Let A invests Rs. X and B invests Rs. Y for p months and q months respectively. Then at the end of the year

(A’s share of Profit) : (B’s share of Profit) = xp : yq

Examples –

Q- 1> A, B and C invests some amount of money in a business. A invests 3 times as much as B invests and B invests two-third of what C invests. At the end of the year, the profit earned is 6600 rupees.  Find the share of B.

Solution-

Let C’s invests = Rs. X

Then B’s investment will be = 2/3 of x

A’s investment = (3 × 2/3 of x) = Rs. 2x

Now Ratio of their Investment = 2x : 2x/3 : x = 6 : 2 : 3

Thus, B’s Share = [2/(6+2+3)] × 6600 = Rs. 1200 (Ans.)

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