Partnership – The total amount of money required to start a business is called its capital. It is not always possible for a single person to invest huge amount of money. So, two or more persons come together and start business jointly. Such a business is called partnership. The people who jointly runs the business are called partners. The money invested by the partners in the business is called investment.
Types of Partnership
- In general partnership, the period of investment is the same and the partners divide profit or loss in the ratio of ther investments.
- In compound partnership, the investments and the periods of investment differ. Then their investrments reduce to investments per month or year and the profit or loss is divided in the ratio of these converted investments.