What is Partnership |Partnership Definition , Features of partnership, Examples.

What is Partnership:
What is Partnership

In a trade, sometimes two or more partners invest their capital together and divide the profit or loss in that trade into the amount invested. If the capital invested in a trade is for different periods, then the division of profit or loss is in proportion to the multiplication of capital and term.

Properties of partnership :
1. The amount invested to set up a trade or industry is called capital.
2. People who participate in a transaction are called partners.
3. The transaction of the partner is called partnership.
4. If the trading partners have the same term, the profit or loss share is equal to the capital.
5. A partnership of equal duration is called a simple partnership.
6. If the trading partners have different capital and term, the distribution of profit or loss is equal to the product of capital and term.
7. Trade partnership if the profit or loss is the same, There is an inverse ratio between the capital ratio and the term ratio.
8. Since the partner's capital is different as well as the term is different, Called a mixed partnership.

Examples of Partnership:
1) Ram and Hari started a business with a capital of Rs 14,200 and Rs 15,600 respectively. At the end of the year, he made a profit of Rs 74,500, what is the share of Ram's profit?
Ans. :
Ram's capital = 14200
Hari's capital = 15600
Capital Ratio = 14200 : 15600
                         = 71 : 78
Ram's Profit = ( Proportion of Hari / Sum of the proportions of the two ) × Gross profit
                       = { 71 / ( 71 + 78 ) } × 74500
                       = 35500 ₹.

2) Raju had a capital of Rs 8000 for 9 months in the partnership business If Madhu's capital of Rs 5,000 is 12 months, So to what extent would they have shared the profits in a year?
Ans. :
Raju.                  :   Madhu
8000 × 9           :  5000 × 12
72                       :   60 
24                       :   20
06                       :   05
Therefore, Profit sharing = 6 : 5

3) Reena, Reema and Meera rented a car and used it for 14 hours, 16 hours and 22 hours respectively. If the total car rental is 2080, how much rent will Mira have to pay?
Ans. :
Rent to be paid to a Meera = { 22 / ( 14 + 16 + 22 ) } × 2080
= 22 / 52 × 2080
= 880 ₹.

4) Raju and Sanju started the business in partnership. If their capital ratio is 5: 4 and their term ratio is 3: 5, then they should share the profit.
Ans. :
Profit rate = Capital ratio × Term ratio.
                    = ( 5 / 4 ) × ( 3 / 5 ) 
                    = 3 / 4
therefore, Profit rate = 3 : 4.

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