Partnership Aptitude basics, practice questions, answers and explanations
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Important formula and equation
When two or more than two persons run a business jointly, they are called partners and the deal is known as partnership.
Ratio of Division of Gains:
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 .
Working and Sleeping Partners:
A partner who manages the the business is known as a working partner and the one who simply invests the money is a sleeping partner .
Kind of partners :
There are two kinds of partners.
1.Working or active partner :
When a partner devotes his time for the business in addition to invest his money, he is called a working partner. With mutual agreement, the active partners get some fixed percentage of profit as working allowance.
2.Sleeping or non - active partner
A partner who simply invests money, but doest not attend to the business is called a sleeping partner.
Kinds of Partnership :
1. Simple partnership
If the capitals of several partners are invested for the same period. It is called a simple partnership.
2. Compound or complex partnership :
If the capitals of the partners are invested for different intervals of time, the partnership is called compound or complex.
If the capitals of two partners are invested for the same duration of period and let A 1 and A 2 be their investments and total profit is Rs. P, then share of the partners in the profits are (A1*P)/(A1+A2) and Rs. (A2*P)/A1+A2
If the capitals of two partners be Rs.A1 and A2 for the periods t1 and t2 respectively and the profit be Rs.P, then shares of the partners in the profit are
(A1*t1*p)/A1t1+A2t2 and Rs. (A2*t2*P)/A1t1+A2t2