Question

Distinguish between sacrificing ratio and gaining ratio.

Answer 1

Difference between Sacrificing and Gaining Ratio

$\begin{array}{ccc}\text{Basis of}& \text{Sacrificing Ratio}& \text{Gaining Ratio}\\ \text{Difference}& & \\ \text{Objective}& \text{It is calculated to ascertain the}& \text{It is calculated to ascertain the share of}\\ & \text{share of profit and loss given up}& \text{profit and loss acquired by the}\\ & \text{by the existing partners in favour}& \text{reamining partners (of the new firm in}\\ & \text{of new partners/partner}& \text{case of retirement) from the retiring or}\\ & & \text{deceased partner.}\\ \text{Meaning}& \text{It is the ratio in which old}& \text{It is the ratio in which continuing}\\ & \text{partners agree to sacrifice their}& \text{partner acquires the share of profit from}\\ & \text{share of profit in favour of new}& \text{outgoing partner/partner}\\ & \text{partners/partner.}& \\ \text{Time}& \text{It is calculated at the time}& \text{It is calculated at the time of}\\ & \text{of admission of new}& \text{retirement/death of old}\\ & \text{partners/partner.}& \text{partners/partner.}\\ \text{Calculation}& \text{Sacrificing Ratio = Old Ratio-}& \text{Gaining Ratio=New Ratio-Old Ratio}\\ & \text{New Ratio.}& \\ \text{Effect}& \text{It reduces the profit sharing ratio}& \text{It increases the profit sharing ratio of}\\ & \text{of the existing partners.}& \text{the remaining partners.}\end{array}$