CUET Commerce Exam  >  CUET Commerce Notes  >  General Test Preparation for CUET  >  Introduction to Partnership

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Partnership


1) Partnership:

Partnership is an association of two or more persons who put their money together to carry on some business.

2) Simple partnership:

If capitals of partners are invested for the same period, the partnership is called simple. If the period of investment is the same for each partner, then profit or loss in divided in the ratio of their investments.

Example:

a) If A and B are partners in a business then

investment of A / Investment of B = Profit of A / Profit of B

= Loss of A / Loss of B

 b) If A, B and C are three partners then

Profit of A : Profit of B : Profit of C 

Or loss of A : Loss of B ; Loss of C is equal to

Investment of A : Investment of B : Investment of C

3) Compound partnership:

If the capitals of partners are for different periods, partnership is called compound.

If period of investment is different, then profit or loss is divided in the ratio of the product of capital and the period for which invested.

 For example (a): If A and B are partners in business then

Capital x period for A / Capital x period for B

= profit of A / Profit of B

 = Loss of A / Loss of B

 b) If A, B and C are partners then 

capital x  period for A : Capital x period for B

: capital x period for C

= Profit of A : Profit of B : Profit of C

= Loss of A : Loss of B : Loss of C

4) Monthly equivalent investment:

It is the product of the capital invested and the period for which it is invested

5) Working partner. 

A working partner is the one who manages the business.

6) Sleeping partner:

Is the one who provides capital but does not attend to the business

 Some Results:

(i) If investments are in the ratio a : b : c and timings of their investment are in the ratio x : y : z then profit or loss is divided in the ratio ax : by : cz

 ii) If investments are in the ratio a : b : c and profits are in the ratio p : q : r then ratio of times is p/a : q / b : r / c

 iii) If the ratio of periods of investment are t1 : t2 : t3 and their profits are in the ratio a : b : c, then their capitals will be in the ratio a/t1 : b/t2 : c/t3

 

Solved Examples 

 Example 1

Ram, Mohan and Santosh together started a business in partnership.

The ratio of their capital is 3 : 4 : 7. If profit after one year is Rs. 21000, what will be Ram’s share in the profit.

Sol: sum of proportions= 3 + 4 + 7 = 14

So Ram’s Share = 3/14 x 21000 = Rs. 4500

 Example 2: 

A and B start a business by investing Rs. 4000 and Rs. 12000 respectively. Find the ratio of their profit after one year.

Sol: The profit will be divided in the ratio of the capital

So ratio is 4000 : 12000 or 1 : 3

 Example 3: 

A and B invested Rs. 24000 and Rs. 8000 for a period of 2 years and saved Rs. 48000. What will be their share respectively.

Sol: Profit will be divided in the ratio of their capital i.e. 24000 : 8000 or 3 : 1

A will get ¾ x 48000 = 36000

B will get ¼ x 48000 = 12000

 Example 4: 

A and B started a business and A invested 3 times the amount as compared to B. Find their share in the annual profit of Rs. 52000.

Sol: Profit will be divided in the ratio of their investment i.e.

3 : 1    

So A’s share is ¾ x 52000 = Rs. 39000

B’s share is ¼ x 52000 = Rs. 13000

 Example 5:

A started a business and invested Rs. 2000. After 3 months B joined him and invested Rs. 8000. Find the ratio of their profit at the end of the year.

Sol: A’s share : B’s share

= 2000 x 12 : 8000 x 9

= 24000 : 72000

= 1 : 3

 Example 6:

A started a business with Rs. 5000 and B jointed after 4 months with Rs. 4000. After a year they earn a profit of Rs. 23000.   

Find the share of A and B respectively.

 Solution: A invested Rs. 5000 for 12 months = 5000 x 12

= 60000

B invested Rs. 4000 for 8 months = Rs. 4000 x 8

=32000

Ratio of profit 60000 : 32000 i.e. 15 : 8

A’s share in Rs. 23000 = 15/23 x 23000 = Rs. 15000

B’s share in Rs. 23000 = 8 /23 x 23000 = Rs. 8000

 

Example 7: 

A started business with Rs. 2000. After 3 months B joins with Rs. 4000. C invested a sum of Rs. 10000 for 2 months only. How will they divide profit of Rs. 8000 after one year.

Sol: A invested Rs. 2000 for 12 months = 2000 x 12 = 24000

B invested Rs. 4000 for 9 months = 4000 x 9 = 36000

C invested Rs. 10000 for 2 months = 10000 x 2 = 20000

Share will be divided in the ratio

24000 : 36000 : 20000

6 : 9 : 5

A’s share in profit of Rs. 8000 = 6/20 x 8000 = Rs. 2400

B’s share in profit of Rs. 8000 = 9 / 20 x 8000 = Rs. 3600

C’s share in profit of Rs. 8000 = 5/20 x 8000 = Rs. 2000

 

Example 8: 

A, B, C invested capital in the ratio 2 : 3 : 5. At the end they received profit in the ratio of 5 : 3 : 12. Find the ratio of the time for which they invested their capital.

Sol: Ratio in profit = 5 : 3 : 12

Ratio in investment = 2 : 3 : 5

Ratio in times will be 5/2 : 3/3 : 12/5

Or 5/2 : 1 : 12 / 5

Multiply by 10

25 : 10 : 24

 

Example 9: 

A, B, C invested money for time periods in the ratio of 5 : 6 : 8 and earned profit in the ratio of 5 : 3 : 12. Find the ratio of investment of A, B and C

Sol: Ratio of profit 5 : 3 : 12

Ratio of time periods 5 : 6 : 8

So ratio of investments 5/5 : 3/6 : 12/8

Or 1 : ½ : 3/2 or 2 : 1 : 3

The document Introduction to Partnership | General Test Preparation for CUET - CUET Commerce is a part of the CUET Commerce Course General Test Preparation for CUET.
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FAQs on Introduction to Partnership - General Test Preparation for CUET - CUET Commerce

1. What is a partnership?
Ans. A partnership is a business structure where two or more individuals come together to operate and share the profits and losses of a business.
2. How is a partnership different from a sole proprietorship?
Ans. A partnership differs from a sole proprietorship as it involves multiple owners who share the responsibilities, profits, and losses of the business, whereas a sole proprietorship is owned and operated by a single individual.
3. What are the advantages of forming a partnership?
Ans. Some advantages of forming a partnership include shared decision-making, shared workload, access to more resources and capital, and the ability to benefit from the diverse skills and expertise of each partner.
4. What are the types of partnerships?
Ans. There are different types of partnerships, including general partnerships where all partners have equal responsibilities and liabilities, limited partnerships where there are both general and limited partners, and limited liability partnerships where partners have limited personal liability for the partnership's debts and obligations.
5. How do partners distribute profits and losses in a partnership?
Ans. The distribution of profits and losses in a partnership is typically determined by the partnership agreement. It can be based on the percentage of ownership, capital contributions, or a predetermined formula agreed upon by the partners.
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