Introduction: Partnership Problems

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.
  1. 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 : … : CnTn = P1 : P2 : P3 : … : Pn

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