Partnership Cheat Sheet

Partnership Cheat Sheet

Quick Revision

In a partnership, two or more people invest money in a business and share the profit (or loss) in the ratio of their capital × time.

Ready to practise? Take the Partnership quiz

1. The Core Rule

Profit is divided in the ratio of each partner's investment × time:

A's share : B's share = (Cₐ × tₐ) : (C_b × t_b)

where C is the capital and t is the time for which it was invested.

2. Simple vs Compound Partnership

• Simple partnership — all partners invest for the same time. Profit is shared in the ratio of the capitals alone.

A : B = Cₐ : C_b

• Compound partnership — partners invest for different times. Profit is shared in the ratio of capital × time.

A : B = (Cₐ × tₐ) : (C_b × t_b)

3. Worked Example (different times)

A invests ₹12,000 for 8 months; B invests ₹9,000 for 10 months.

Ratio = (12000 × 8) : (9000 × 10)
      = 96000 : 90000
      = 16 : 15

So a ₹6200 profit is split as 6200 × 16/31 and 6200 × 15/31 = ₹3200 and ₹3000.

4. Working and Sleeping Partners

• A working partner manages the business; a sleeping partner only invests.
• A working partner may first take a salary or a commission. Deduct that from the profit; share the remaining profit in the capital-time ratio.

Example

Total profit ₹10,000; working partner takes 10% as salary.

Salary = ₹1000; remaining ₹9000 is shared in the investment ratio.

5. Exam Quick Tips

• Always share profit in the ratio of capital × time, not capital alone (unless the time is equal).
• If a partner changes their capital mid-year, split it into periods and add the capital × time products.
• Deduct any salary or commission first, then divide the rest.
• Loss is shared in the same ratio as profit.

Keep revising with the rest of the Maths section:

• All Maths topics
• Data Interpretation Cheat Sheet
• Simplification Cheat Sheet

How this was made: Drafted with AI assistance; spot-checked by the editor on 31 October 2026.