Partnership:

When two or more than two persons operate a business jointly, they are called partners and the such deal is known as partnership.

Active(working) and Passive(sleeping) Partners:

A partner who manages the business is known as a working partner and the partner one who simply invests the money in the business is a sleeping partner.

Important points

(1) When investments of all the partners are for the same span of 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.

(2) 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). So gain or loss is divided in the ratio of these capitals. Suppose A invests Rs. x for a months and B invests Rs. y for b months then,
(A's share of profit) : (B's share of profit)= xa : yb.