Advertisements
Advertisements
Questions
Distinguish between sacrificing ratio and gaining ratio.
Distinguish between sacrificing ratio and gaining ratio in the context of partnership accounting without giving an example.
Distinguish Between
Advertisements
Solution
| Basis of Difference | Sacrificing ratio | Gaining Ratio |
| Meaning | It is the ratio in which old partners agree to sacrifice their share of profit in favour of new partners/partner. | It is the ratio in which continuing partner acquires the share of profit from outgoing partner/partner. |
| Calculation | Sacrificing Ratio = Old Ratio – New Ratio | Gaining Ratio = New Ratio – Old Ratio |
| Time | It is calculated at the time of admission of new partners/partner. | It is calculated at the time of retirement/death of old partners/partner. |
| Objective | It is calculated to ascertain the share of profit and loss given up by the existing partners in favour of new partners/partner. | It is calculated to ascertain the share of profit and loss acquired by the remaining partners (of the new firm in case of retirement) from the retiring or deceased partner. |
| Effect | It reduces the profit share of the existing partners. | It increases the profit share of the remaining partners. |
shaalaa.com
Is there an error in this question or solution?
