(596 THE HOME, FARM AND BUSINESS CYCLOPAEDIA. 



closing the books, but allowing all the accounts upon which losses and 

 gains have been made to remain open until the end of the year. The 

 former method is the better one, for the reason that there can afterwards 

 be no dispute among the partners with regard to the relative individual 

 standing of each at the time of the commencement of business under the 

 new copartnership. 



INVESTMENTS. 



118. Investments are made in several different ways, a few descrip- 

 tions of which are here given : 



1st. The partners invest equally, and share equally in the losses and 

 gains. After the partners first enter into business their interests in the 

 firm are constantly changing, so at the end of the first year, when the 

 books are closed, there may be a wide difference between the then pre- 

 sent worth of each. The partners who have the larger interest in the 

 business sometimes require those who have the smaller to pay interest to 

 them on the "surplus capital; but there are some who are more lenient 

 with their unfortunate (but perhaps extravagant) co-workers, and do not 

 require them to pay interest on the surplus. 



2nd. Capital is sometimes invested against Experience, the partner 

 investing the money having no experience in the business in which he 

 enters, and the partner having the experience investing no money. All 

 the money invested is of course credited to the party who invests it, the 

 party who has the experience sharing a certain proportion of the gains or 

 losses of the firm. 



3rd. Partners sometimes invest unequally and share the- gains and 

 losses pro rata, according to investment. 



319. 4th. Interest on Surplus Capital. Partners sometimes invest 

 unequally, and share the gains and losses equally, the partner investing 

 the lesser amount paying the partner investing' the greater, interest on 

 his surplus capital. When this is done, the partner who has the lesser 

 amount invested pays to the partner who has the greater interest on 

 only one-half of the difference, for the reason that it is the same in effect 

 as borrowing so much money; and by borrowing an amount equal to one- 

 half the surplus, lessens the investment of the partner who has the greater 

 amount invested just that amount, and increases the investment of the 

 partner who has the lesser amount invested the same amount, so that 

 they then have an equal interest in the firm. 



