Question

Write define of compound partnership

Answer 1

Answer:

A partnership is an arrangement between two or more people to oversee business operations and share its profits and liabilities. In a general partnership company, all members share both profits and liabilities. Professionals like doctors and lawyers often form a limited liability partnerships.

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Answer 2

Answer:

When partners invest money for different time periods, the partnerships are what we call the compound partnerships. Suppose we have two partners A and B who invest an amount of 'x' and 'y' respectively.

Let the partner A be in the partnership for a time of a and let ‘b’ be the time for which the partner B stays in the partnership. The formula for the share of profit = (A’s share of profit)/(B’s share of profit) = x(a)/y(b)

Step-by-step explanation:

For example,

Khan and Yawer start another partnership together investing Rs. 100000 and Rs. 50000 respectively. But this time Khan stays in the partnership for three months while Yawer stays in it for an entire year. If the partnership was initially for a year, what is the ratio of their profits?

A) 2 : 1 B) 3 : 2 C) 2 : 3 D) 1 : 2

Answer: As per the question the initial investments of Khan and Yawer are in the ratio 2:1.

Using the formula for the compound partnerships, we can write:

(Khan’s share of Profit)/(Yawer’s share of Profit) = (100000×3)/(50000×12); where 12 is the number of months in a year. Thus the ratio of the profits is (Khan’s share of Profit)/(Yawer’s share of Profit) = 1/2 or 1:2. Therefore the ratio is D) 1 : 2.