Match the LIST-I with LIST-IILIST-ILIST-IIA.Gaining RatioI.Average Pr…

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	Gaining Ratio	I.	Average Profit × 100/ Normal Rate of Return
B.	Goodwill	II.	Old Ratio – New Ratio
C.	Sacrificing Ratio	III.	Super Profit × 100/ Normal Rate of Return
D.	Capitalised Value	IV.	New Ratio – Old Ratio

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

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

Two of the List-I items are ratios that compare a partner’s old and new shares; the other two use capitalisation, that is, finding the capital that would earn a given profit at the normal rate of return.

(A) Gaining Ratio — this matches (IV) New Ratio – Old Ratio. A continuing partner gains when his new share is larger than his old share, so his gain is the new share minus the old share.

(B) Goodwill — this matches (III) Super Profit × 100/ Normal Rate of Return. Under the capitalisation of super profits method, goodwill is the capital that would earn the super profit at the normal rate.

(C) Sacrificing Ratio — this matches (II) Old Ratio – New Ratio. An old partner sacrifices the part of his share he gives up, so his sacrifice is the old share minus the new share.

(D) Capitalised Value — this matches (I) Average Profit × 100/ Normal Rate of Return. The capitalised value of the average profit is the capital needed to earn the average profit at the normal rate; goodwill under that method is this value minus the actual capital employed.

NCERT (2026-27 edition):
Capitalisation Method

Extract from the NCERT textbook

NCERT (2026-27 edition):
Sacrificing Ratio – “… The ratio is normally clearly given as agreed among the partners which could be the old ratio, equal sacrifice, or a specified ratio. The difficulty arises where the ratio in which the new partner acquires his share from the old partners is not specified. Instead, the new profit sharing ratio is given. In such a situation, the sacrificing ratio is to be worked out by deducting each partner’s new share from his old share.”

NCERT (2026-27 edition):
Gaining Ratio – “The ratio in which the continuing partners have acquired the share from the retiring/deceased partner is called the 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.”