Match List-I with List-II. List-I List-II (A) Profits of firm after a…

Match List-I with List-II.

List-I	List-II
(A) Profits of firm after admission of partner	(I) Sacrificing Ratio
(B) Goodwill brought in by new partner	(II) Old Ratio
(C) Profit on revaluation	(III) Gaining Ratio
(D) Retiring Partner's Share of Goodwill	(IV) New Ratio

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 2

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

Note: The given answer is as per the official NTA Answer Key. However, the answer given by NTA appears to be incorrect, and the correct answer should be Option (1), because each item is shared in a different ratio from the one Option (2) pairs it with, as explained below.

(A) Profits of firm after admission of partner — this matches (IV) New Ratio. After admission all partners, including the new one, share future profits in the new profit sharing ratio.

(B) Goodwill brought in by new partner — this matches (I) Sacrificing Ratio. The premium compensates the old partners for the share they give up, so it is divided in the ratio of their sacrifice.

(C) Profit on revaluation — this matches (II) Old Ratio. The gain belongs to the period before admission, so only the old partners share it, in their old ratio.

(D) Retiring Partner’s Share of Goodwill — this matches (III) Gaining Ratio. The continuing partners who gain the retiring partner’s share pay for it in their gaining ratio.

Advice for the exam: In the real exam, mark the answer that is correct as per accounting principles. If NTA’s provisional answer key marks a different option, challenge it during the answer-key challenge window, giving proper reasoning. NTA does revise its key when a challenge is well justified, so a sound challenge can raise your marks.

NCERT (2026-27 edition):
New Profit Sharing Ratio – “… In any case, on admission of a new partner, the profit sharing ratio among the old partners will change keeping in view their respective contribution to the profit sharing ratio of the incoming partner. Hence, there is a need to ascertain the new profit sharing ratio among all the partners.”

NCERT (2026-27 edition):
Sacrificing Ratio – “… As stated earlier, the new partner is required to compensate the old partner’s for their loss of share in the super profits of the firm for which he brings in an additional amount as premium for goodwill. This amount is shared by the existing partners in the ratio in which they forgo their shares in favour of the new partner which is called sacrificing ratio.”

NCERT (2026-27 edition):
Revaluation of Assets and Reassessment of Liabilities – “… If the revaluation account finally shows a credit balance then it indicates net gain and if there is a debit balance then it indicates net loss. Which will be transferred to the capital accounts of the old partners in old ratio.”

NCERT (2026-27 edition):
Treatment of Goodwill – “The retiring or deceased partner is entitled to his share of goodwill at the time of retirement/death because the goodwill has been earned by the firm with the efforts of all the existing partners. Hence, at the time of retirement/death of a partner, goodwill is valued as per agreement among the partners the retiring/ deceased partner compensated for his share of goodwill by the continuing partners (who have gained due to acquisition of share of profit from the retiring/ deceased partner) in their gaining ratio.”