* Whenever two or more persons starts a business together , the business is called partnership and and the persons are called partners.
*Active Partners: persons who take part in the business actively, are called active partners. they have to look after the business and responsible for the decisions taken for welfare of the company.
*Sleeping partners: persons who only invests money to the business , they are not responsible for the decisions, they just enter to the business to earn the profit only.
*Distribution Of Profit: profit of partners is always calculated on the basis of ratio which is obtained by multiplying the investments with their time for which the money was taken in use. usually time is given in such kind of question but in some cases if it is not given that time is assumed to be one year or twelve months.
* Ratio of Divisions of Gains:
When investments of all the partners are for the same time, the gain or loss is distributed among the partners in the ratio of their investments.
Suppose A and B invest Rs. x and Rs. y respectively for a year in a business, then at the end of the year:
(A's share of profit) : (B's share of profit) = x : y.
When investments are for different time periods, then equivalent capitals are calculated for a unit of time by taking (capital x number of units of time). Now gain or loss is divided in the ratio of these capitals.
Suppose A invests Rs. x for p months and B invests Rs. y for q months then,
(A's share of profit) : (B's share of profit)= xp : yq.