Profit and loss sharing

Profit and loss sharing is like when you and your friend are playing with toys, and you agree to share them.

If your friend brings more toys to play with, you both can have more fun, so your friend gets a bigger share of the toys to play with. This is like when one person invests more money in a business, they get a bigger share of the profits.

But if one of you accidentally breaks a toy, then you both feel bad and share the responsibility for fixing it. This is like in a partnership, if the business loses money, both people share the responsibility for the loss.

So basically, when people share in profits and losses, they are agreeing to work together, share the good parts, and also share the bad parts. It's like being a team, where everyone contributes and everyone takes responsibility.