Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Admission of a Partner

Question:

If nothing is mentioned on admission of a new partner, the sacrificing ratio is same as which ratio?

Options:

Old ratio

New ratio

Gaining ratio

Any of the above

Correct Answer:

Old ratio

Explanation:

The correct answer is option 1- Old ratio.

If nothing is mentioned otherwise, the sacrificing ratio (i.e., the proportion of profit the old partners give up in favor of the new partner) is assumed to be the same as the old profit-sharing ratio.

Sacrificing Ratio = Old Ratio – New Ratio. If no special arrangement is made, the new partner’s share is taken in the old ratio from the existing partners.

Example: Old partners A and B share profits in 3:2. A new partner C is admitted for 1/5 share. If nothing is stated, A and B will sacrifice that 1/5 in the ratio of 3:2 — i.e., their old ratio. So, the sacrificing ratio = old ratio (when no other information is provided).