Basic Concepts to solve Partnership Problems

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Basic Concepts to solve Partnership Problems

Partnerships-400x300

 

We are here with the discussion on Partnership topic of Quantitative section.Now a days this topic have became an important part of the Quantitative test in various competitive exams.

When two or more than two persons run a business jointly,they are called ‘partners’. In the business the deal between them is known as ‘Partnership’.

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Kinds of Partnership:

  • Simple Partnership: When investments of all the partners are for the same period of time, the profit & loss is distributed among the partners in the ratio of their original investments.
  • Compound Partnership: When investments of all the partners are for different period of time. then equivalent capitals are calculated for a unit of time and profit or loss is divided in the ratio of the product of time and investment.

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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