GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Sacrificing ratio
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Their capital ratio
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Old profit sharing ratio
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New profit sharing ratio
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Detailed explanation-1: -At the time of admission of a partner, the incoming partner brings in an extra amount to compensate the existing partners for their loss in the super profits because of the addition of his share in the profits of the firm.
Detailed explanation-2: -Calculate the proportionate Capital of New Partner as under: New Partner’s Capital =Total capital of new firm x New partner’s proportion of share of profit.
Detailed explanation-3: -According to the Partnership Act 1932, a new partner can be admitted into the firm only with the consent of all the existing partners unless otherwise agreed upon. With the admission of a new partner, the partnership firm is reconstituted and a new agreement is entered into to carry on the business of the firm.
Detailed explanation-4: -In case of admission of a new partner, the profit and loss arising from revaluation account are distributed between the old partners in the old ratio. Because only old partners have put effort to earn revaluation profit or loss, therefore it’s distributed between old partners.