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Standard XII

Accountancy

Admission of New Partner

Old profit sh...

Question

Old profit sharing ratio minus new profit sharing ratio is equal to _______________.

Sacrificing ratio

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Gaining ratio

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Capital Ratio

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None of these

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Solution

The correct option is A Sacrificing ratio
The existing partners sacrifice a share of their profit in favour of the new partner. Hence, the calculation of new profit sharing ratio becomes necessary. The ratio in which the existing partners agree to sacrifice their share of profits in favour of the incoming partner is called the sacrificing ratio.
Formula for sacrificing ratio is :
Old ratio - New ratio = Sacrificing ratio

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