Apptitude

Partnership

When two or more than two persons run a business together, they are called partners and the deal is known ad partnership.

There are two kind of partnership:- Partnership

  1. Simple Partnership
  2. Compound Partnership

Simple Partnership :- All the partners invest their capital or investment for same period of time.In this case profit earned is divided into the ratio of capital. Lets Understand with example :-

Example :- A and B started a business by investing Rs. 2000 and 3000 respectively for 1 year. Find the share of both, out of an annual profit of Rs. 2500.

Solution :- Here both have invested for same period of time so partnership is simple hence profit is divided into the ratio of capital

A:B = 2000:3000 =2:3

total ratio = 5

Profit of A = (2/5)*2500 = 1000

Profit of B = (3/5)*2500 = 1500




Compound Partnership :- All partners invest their capital for different period of time. Here profit in divided into the ratio of time value of money.

Time value of money = capital * time

Example :- A and B started a business by investing Rs. 2000 and 3000 respectively in which A invested for 1 year and B for half year. Find the share of both, out of an annual profit of Rs 3500.

Solution :- Here both have invested for different period of time so partnership is compound hence profit is divided into the ratio of time value of money

A:B = 2000*12 : 3000*6 =24000 : 18000 = 4:3

total ratio = 7

Profit of A = (3500/7)*4 = 2000

Profit of A = (3500/7)*3 = 1500

 

Working and Sleeping Partners :- A partner who manages the business is known as working partner and the one who simply invest money is a sleeping partner.

Working partner will get profit as well as salary whereas sleeping partner will only get profit no salary.

Lets Understand with an example:-

Example :- A and B started business by investing Rs. 100 and Rs 200 for same period of time but A is a active partner and B is sleeping partner and it was decided that 10 % of salary would be given to A.  Find the share of both, out of an annual profit of Rs 30.

Solution :-Annual profit = Rs 30

Salary of A = 10% of 30 = Rs 3.

Now profit = 30 -3 = Rs 27

Now profit is divided into the ratio of capital because both invested for same period of time.

A:B = 100 :200 = 1:2

total ratio = 3

Profit of A = [(1/3)*27 + 3] = 12

Profit of B = (2/3)*27 = 18

In case you have any doubt regarding this topic please let us know in comment box below we are happy to help you.

Myself Shubham an computer science engineer with lots of dream having an unseen attitude with lots of thoughts

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About Shubham Lashkan

Myself Shubham an computer science engineer with lots of dream having an unseen attitude with lots of thoughts
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2 thoughts on “Partnership

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