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(b) Partnership
A business in which two or more persons run the business and they are responsible
for the profit and loss is called the partnership.
If the partners start the business and close it together with same or different investment
capital, this partnership is called a simple partnership.
If the partners contribute different capitals for different time periods or at least one
partner contributes two or more capitals for different time periods, then this partnership
is called a compound partnership. In this case the profit or loss is divided in the ratio of
monthly investments.

Example 1: Saud and Ammar started a business with capitals of Rs.56,000 and Rs.64,000
respectively. After one year they earned a profit of Rs.22,500. Find the share of each one.

Solution: The simplified form of capital share ratio:

Saud’s share : Ammar’s Share
: 64,000
56,000 : 64
: 8
56

7

Sum of ratios = 7 + 8 = 15
Total Profit = Rs. 22,500

Saud's Profit = 7 × 225001500
1 15

=7 × 1500 =Rs. 10,500

Ammar's Profit = 8 × 225001500
1 15

= 8 x 1500 = Rs. 12,000

Example 2: Tahir started a business with a capital of Rs.l5,000. After 5 months Umar
also joined him with an investment of Rs.30,000. After the start of 9 month’s Usman joined
them by investing Rs.45,000. At the end of the year they earned a profit of Rs.406000. Find
the share of each one.

version: 1.1

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