Match List – I with List – II.

Choose the correct answer from the options given below :

(A)-(I), (B)-(III), (C)-(IV), (D)-(II)

The correct answer is Option (2) - (A)-(I), (B)-(III), (C)-(IV), (D)-(II).

* Sacrificing Ratio- Old Ratio – New Ratio
Sacrificing ratio is calculated at the time of admission of a new partner because old partners sacrifice some of their share in profit in favor of new partner. It is calculated by subtracting new share from old share.

* Normal Profit- Capital employed × $\frac{\text{Normal rate of return}}{100}$ 
Normal profit is calculated in the context of valuing goodwill by multiplying the firm's capital by the normal rate of return. The normal rate of return represents the expected or standard rate of return on the capital employed in a similar business. To calculate the normal profit, the firm's capital, which includes partners' capital and reserves and surplus, is multiplied by the normal rate of return. This calculation provides an estimate of the expected profit that would be considered normal for a business of a similar nature and capital investment. The normal profit serves as a benchmark or baseline against which the excess or super profits are measured when valuing goodwill based on the super profits method.

* Gaining Ratio-New Ratio – Old Ratio
Gaining ratio is calculated at the time of retirement or death of a partner because remaining partners gains in the profit due to the exist of old partner. It is calculated by subtracting old share from new share.

* New Ratio- Old Ratio – Sacrificing Ratio. New profit sharing ratio is calculated at the time of both admission and retirement or death of a partner. As gaining ratio is calculated at the time of retirement so new profit ratio is related with retirement here.