Match the column for situations at the time of admission of new partners.
| Column-1 | Column -2 |
| A) Future Profits | 1) Old ratio |
| B) General Reserves | 2) New ratio |
| C) Employee provident fund | 3) Sacrificing ratio |
| D) Goodwill of incoming partner | 4) Not distributed |
Answer & explanation
Correct answer: option 1
* Future profits = New ratio. Future profits are shared by the remaining partners (old partners plus new partner) in the new ratio.
* General Reserves = Old ratio. General reserves are a part of accumulated profits. Accumulated profits belong to old partners so they will be shared in old partners in old ratio.
* Employee provident fund= Not distributed. Employee provident fund is a liability of the partnership firm so it is not distributed among the partners.
* Goodwill of incoming partner= Sacrificing ratio. When new partner brought goodwill it will be shared by the sacrificing partners in their sacrificing ratio.