Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

Which of the following is incorrect ?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Gaining Share = Old share + New Share

Both ratios come from subtracting one share from the other, never from adding them. The sacrificing share is what an old partner gives up; the gaining share is new share minus old share, what a continuing partner takes over. Option (2) adds the two shares, so it is the incorrect statement.

Option (1) Sacrificing Share = Old Share - New Share — A true formula. An old partner’s fall in share is his sacrifice.
Option (3) Gaining Share = New Share - Old share — A true formula. A continuing partner’s rise in share is his gain.
Option (4) Old share = Sacrificing Share + New Share — A true formula. It is the sacrificing formula with the terms moved across.

NCERT (2026-27 edition):
Sacrificing Ratio

Extract from the NCERT textbook

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.”