what is compound partnership business?
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1) Partnership: If two or more than two persons run a business jointly, then they are called partners and the deal is known as partnership. There are two types of partnership: simple partnership and compound partnership.
2) Simple partnership:
a) In this type of partnership, the capitals of each of the partners are invested for same time.
b) Gains or losses are divided among the partners in the ratio of their investments.
3) Compound partnership:
a) In this type of partnership, the periods of investments are unequal.
b) Equivalent capitals for a unit of time are calculated by multiplying the capital with number of units it was in business.
2) Simple partnership:
a) In this type of partnership, the capitals of each of the partners are invested for same time.
b) Gains or losses are divided among the partners in the ratio of their investments.
3) Compound partnership:
a) In this type of partnership, the periods of investments are unequal.
b) Equivalent capitals for a unit of time are calculated by multiplying the capital with number of units it was in business.
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Step-by-step explanation:
In compound parmership, the investments and the periods of investment differ. Then their investments reduce to investments per month or year and the profit or loss is divided in the ratio of these converted investments.
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