Concept And Shortcut of Partnership

Introduction:- 

When more than one person agree to invest their money to run a business or firm then this kind of agreement is called partnership. The persons involved in the partnership are called partners.

There are two types of partnership.

1. Simple Partnership:  In simple partnership, capitals of partners are invested for the same period of time.

2. Compound Partnership:  In compound partnership, capitals of partners are invested for the different period of time.

Basic Formulas

If two partners A and B are investing their money to run a business then (Simple Partnership)

Capital of A : Capital of B = Profit of A : Profit of B

If two partners A and B are investing their money for different period of time to run a business then

(Compound Partnership)

      

      Capital of A × Time period of A : Capital of B × Time period of B

    

      = Profit of A : Profit of B

If n partners are investing for different period of time then

C₁T₁ : C₂T₂ : C₃T₃ : … : C_nT_n = P₁ : P₂ : P₃ : … : P_n

Where C is the capital invested, T is time period of capital invested and P is profit earned.

Shortcut Methods

Rule 1:

If two partners are investing their money C₁ and C₂ for equal period of time and their total profit is P then their shares of profit are

    

     If these partners are investing their money for different period of time 

     which is T₁ and T₂, then their profits are

  

    

     Rule 2:

     If n partners are investing their money C₁, C₂, …, C_n for equal period of time and their total profit is P then their shares of profit are

If these partners are investing their money for different period of time which 

is T₁, T₂,… , T_n then their profits are