Distinguish between the sacrificing ratio and the gaining ratio among partners.

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Solution

Basis of Difference

Sacrificing ratio

Gaining ratio

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.

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 partners/partner.

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.

Calculation

Sacrificing ratio = Old ratio – New ratio

Gaining ratio = New ratio – Old ratio

Effect

It reduces the profit sharing ratio of the existing partners.

It increases the profit sharing ratio of the remaining partners.

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Similar questions

Differentiate between sacrificing ratio and gaining ratio.

Give any one distinction between sacrificing ratio and gaining ratio.

A

B

3 : 2

C

A, B

C

4 : 3 : 2

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Basis of Difference	Sacrificing ratio	Gaining ratio
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.
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 partners/partner.
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.
Calculation	Sacrificing ratio = Old ratio – New ratio	Gaining ratio = New ratio – Old ratio
Effect	It reduces the profit sharing ratio of the existing partners.	It increases the profit sharing ratio of the remaining partners.