Important Concerpts, formulae and tricks and shortcuts of Partnership:

Partnership - Sometimes two or more than two persons agree to run a business jointly. They are called partners and the deal is known as partnership.

Important formulae and tricks and shortcuts of Partnership:

1 . Simple partnership: When capitals of all the persons are invested for the same time intervals, the gain or loss in the business is divided among the partners in the ratio of their investments.

2 . Compound partnership: When capitals of partners are invested for different time intervals then equivalent capitals are obtained for 1 unit of time by multiplying the capital with the number of units. The gain or loss is now divided among partners in the ratio of these capitals.

Formula for compound partnership is

3. When investment of all partners are for the same time, the loss or profit is distributed among partners in the ratio of investment.

Ex. Let P and Q invested Rs. 1000 and Rs. 2000 for one year in a business then share of profit and loss be ,

P's share of profit : Q's share profit = 1000 x 12 : 2000 x 12 = 1 : 2

4. When investments are for different time period, then profit ratio is calculated as capital (invested) multiplied by time period of investment.

Ex. Let P and Q invested Rs. 1000 and Rs. 2000 for 1 year and 2 year respectively in a business then share of profit and loss be ,

Ex. P's share of profit : Q's share profit = 1000 x 1 : 2000 x 2 = 1 : 4

or

1000 x 12 : 2000 x 24 = 1 : 4

For solved problems on above formulas please visit below sections: