Match List-I with List-II. LIST I LIST II (A) Gaining Ratio (I) New S…

Match List-I with List-II.

LIST I	LIST II
(A) Gaining Ratio	(I) New Share - old Share
(B) Sacrificing Ratio	(II) Old Share - New Share
(C) Admission of Partner	(III) Partner may be paid amount more that what has actually due to him for hidden goodwill share.
(D) Retirement of Partner	(IV) Partner may or may not bring his share of goodwill in cash

Choose the correct answer from the options given below

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A)-(I), (B)-(II), (C)-(IV), (D)-(III)

On reconstitution, some partners gain a share of profit and some give it up, and goodwill is settled in a way that suits each event.

(A) Gaining Ratio — this matches (I) New Share - old Share. On retirement or death, each continuing partner gains the excess of his new share over his old share.

(B) Sacrificing Ratio — this matches (II) Old Share - New Share. On admission, each old partner gives up the excess of his old share over his new share.

(C) Admission of Partner — this matches (IV) Partner may or may not bring his share of goodwill in cash. If he brings it, the premium is shared by the sacrificing partners; if not, his current account is debited.

(D) Retirement of Partner — this matches (III) Partner may be paid amount more that what has actually due to him for hidden goodwill share. A lump-sum payment above his capital balance is treated as his share of hidden goodwill.

NCERT (2026-27 edition):
Gaining Ratio – “… The problem of calculating gaining ratio arises primarily when the new profit sharing ratio of the continuing partners is specified. In such a situation, the gaining ratio should be calculated by, deducting the old share of each continuing partners from his new share i.e., new profit share minus old profit share, i.e., new profit share minus old profit share.”

NCERT (2026-27 edition):
Sacrificing Ratio – “The ratio in which the old partners agree to sacrifice their share of profit in favour of the incoming partner is called sacrificing ratio. The sacrifice by a partner is equal to : Old Share of Profit – New Share of Profit …”

NCERT (2026-27 edition):
When the new Partner brings goodwill in cash – “… The amount of premium brought in by the new partner is shared by the existing partners in their ratio of sacrifice.”

NCERT (2026-27 edition):
When the new partner does not bring goodwill in cash, partly or fully – “Goodwill not brought by the new partner will be debited to current account of new partner while sacrificing partners' capital accounts will be credited for their respective shares.”

NCERT (2026-27 edition):
Hidden Goodwill – “If the firm has agreed to settle the retiring or deceased partner’s account by paying him a lump sum amount, then the amount paid to him in excess of what is due to him, based on the balance in his capital account after making necessary adjustments in respect of accumulated profits and losses and revaluation of assets and liabilities, etc., shall be treated as his share of goodwill (known as hidden goodwill).”