General Aptitude: Partnership Business

By Asha Gupta|Updated : June 15th, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Partnership:

Definition: When two or more two persons/partners invest in a business for a certain time, to get some profit, that’s called partnership. Or When two or more people invest money in a business, persons are called Partners, their relationship is called Partnership, and money/amount invested is called Capital.

Types of Partnership:

  1. simple partnership: If they invest money for the same time, it is called a simple partnership.
  2. compound partnership: If they invest money for different times, it is called compound partnership. 

Types of partners:

Active partner: The person, who invests his money as well as his time in the business is called an active partner.

Sleeping partner: The person, who invests only his money, not the time is called a sleeping partner.

Note: Active partners always get a salary for managing the business, and that salary is given from the profit earned.

Important concepts:

  1. Profit is directly proportional to Time and Investments.
  2. If two partners A and B invest capitals CA and CB and invest their money for TA and TB time periods respectively. Then the Ratio of their respective shares in Profit: PA : PB = (CA x TA) : (CB x TB)
  3. If two partners A, B, and C invest capitals CA, CB, and CC and invest their money for TA, TB, and TC time periods respectively. Then the Ratio of their respective shares in Profit: PA : PB : PC = (CA x TA) : (CB x TB) : (Cc x Tc)

 

 

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Posted by:

Asha GuptaAsha GuptaMember since Mar 2021
Associate Content Developer - AE/JE Non-technical
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