Match List I with List II. List I List II A. Sacrificing Ratio I. New…

Match List I with List II.

List I	List II
A. Sacrificing Ratio	I. New Ratio - Old Ratio
B. New Ratio	II. Old ratio- New Ratio
C. Gaining Ratio	III. Old ratio + Gaining Ratio
D. Value of goodwill	IV. Average profit × No. of years’ purchase

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → A-II, B-III, C-I, D-IV

(A) Sacrificing Ratio — this matches (II) Old ratio - New Ratio. It is the share an old partner gives up.

(B) New Ratio — this matches (III) Old ratio + Gaining Ratio. A continuing partner’s new share is his own share plus the share acquired.

(C) Gaining Ratio — this matches (I) New Ratio - Old Ratio. It is the share a partner gains.

(D) Value of goodwill — this matches (IV) Average profit × No. of years’ purchase. This is the average profits method.

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):
New Profit Sharing Ratio – “New profit sharing ratio is the ratio in which the remaining partners will share future profits after the retirement or death of any partner. The new share of each of the remaining partner will consist of his own share in the firm plus the share acquired from the retiring /deceased partner.”

NCERT (2026-27 edition):
Gaining Ratio – “… 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):
Methods of Valuation of Goodwill – “… The goodwill, therefore, should be calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue.”