Question

$A$ and $B$ are sharing profits and losses equally. With effect from $1st$ April, 2018, they agree to sharing-profits in the ratio $4:3$ .Calculate individual partner's gain or sacrifice due to the change in ratio.

Answer 1

Gaining ratio or sacrificing ratio will be calculated as:

Gaining/(Sacrificing Ratio) = New Ratio - Old Ratio

Therefore:

For A = 4/7 - 1/2

= 8 - 7

14

= 1/14 Gaining Ratio

For B = 3/7 - 1/2

= 6 - 7

14

= 1/14 Sacrificing Ratio