Match list I with list II and choose the correct ans from the options given below:
| LIST 1 | LIST 2 |
| A) Interest on Capital | I) Admission of partner |
| B) Gaining Ratio | II) Profit/loss in the old profit-sharing ratio |
| C) Sacrificing ratio | III) Continuing partners |
| D) Revaluation of assets and liabilities | IV) When partnership deed specifically provide for it |
Answer & explanation
Correct answer: option 4
The correct answer is option 4- A-IV, B-III, C-I, D-II.
| LIST 1 | LIST 2 |
| A) Interest on Capital | IV) When partnership deed specifically provide for it |
| B) Gaining Ratio | III) Continuing partners |
| C) Sacrificing ratio | I) Admission of partner |
| D) Revaluation of assets and liabilities | II) Profit/loss in the old profit-sharing ratio |
* Interest on Capital is provided only when the partnership deed specifically provide for it and the firm earns profit. In case of loss no interest on capital is provided.
* 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.
* 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.
* Revaluation of assets and liabilities are done at the time of both admission and retirement of a partner. The profit or loss arising on revaluation is distributed between old partners in their old profit sharing ratio.