A Partnership is an association of two or more persons who invest their money in order to carry on a certain business.  A partner who manages the business is called the working partner and the one who simply invests the money is called he sleeping partner. Partnership is of two kinds: Simple and Compound. 

Simple Partnership: If the capitals of the partners are invested for the same period, the partnership is called simple. 

Compound Partnership: If the capitals of the partners are invested for different lengths of time, the partnership is called compound. 

If the period of investment is the same for each partner, then the profit or loss is divided in the ratio of their investments. 

If A and B are partners in a business, then

If A and B are partners in a business, then

\[\frac{{{\rm{Investment}}\,\;{\rm{of}}\;\,{\rm{A}}}}{{{\rm{Investment}}\,\;{\rm{of}}\,\;{\rm{B}}}}{\rm{ = }}\frac{{{\rm{Profit}}\;\,{\rm{of}}\;\,{\rm{A}}}}{{{\rm{Profit}}\,\;{\rm{of}}\,\;{\rm{B}}}}{\rm{ = }}\frac{{{\rm{Loss}}\,\;{\rm{of}}\;\,{\rm{A}}}}{{{\rm{Loss}}\,\;{\rm{of}}\,\;{\rm{B}}}}\]

If A, B and C are partiers in a business, then

Investment of A : Investment of B : Investment of C 

= Profit of A : Profit of B : Profit of C, or 

= Loss of A : Loss of B : Loss of C