Question

State True or False with reason.

The new ratio minus old ratio is equal to the sacrifice ratio.

Options

• True

• False

Answer 1

This statement is False.

Reason:

When a new partner is admitted, old partners have to sacrifice their profit share in favour of new partner and their old ratio gets reduced and whatever ratio left becomes a new ratio. Hence, as per equation: New Ratio = Old Ratio – Sacrifice Ratio. By interchanging the terms, Sacrifice Ratio = Old Ratio – New Ratio.