Do you agree or disagree with the following statement:
Gain ratio is calculated at the time of admission of a new partner.
Gain ratio is calculated at the time of admission of a new partner.
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Solution and Explanation
Step 1: Understand the concept of Gain Ratio.
The gain ratio is the ratio in which the existing partners share the gain of the new partner's entry. It is calculated at the time of admission of a new partner to determine how much of the new partner's share is taken from the existing partners.
Step 2: Evaluate the statement.
The gain ratio is indeed calculated when a new partner joins to establish the terms for profit sharing.
Step 3: Conclusion.
Therefore, the statement that Gain ratio is calculated at the time of admission of a new partner is correct, and I agree with it.
Final Answer: \[ \boxed{Agree} \]
Top Questions on Admission of Partner
Mr. Deepak and Mr. Abhishek were in partnership sharing profits and losses in the proportion of 3:1 respectively. Their Balance Sheet as on 31st March 2019 stood as follows:
\[\begin{array}{|l|r|l|r|} \hline \text{Liabilities} & \text{Amount (₹)} & \text{Assets} & \text{Amount (₹)} \\ \hline Capital Account: & & Land and Building & 32,000 \\ \hline Mr. Deepak & 1,20,000 & Plant and Machinery & 60,000 \\ \hline Mr. Abhishek & 40,000 & Furniture & 22,000 \\ \hline General Reserve & 16,000 & Stock & 40,000 \\ \hline Sundry Creditors & 80,000 & Sundry Debtors & 64,000 \\ \hline Bank Overdraft & 42,000 & Cash & 80,000 \\ \hline Total: & 2,98,000 & Total: & 2,98,000 \\ \hline \end{array} \]
They admitted Adinath into partnership on 1st April 2019 on the terms that:
\[\begin{array}{rl} \bullet & \text{Adinath shall bring in ₹ 40,000 as his capital for a 1/5 share in future profits and ₹ 20,000 as his share of goodwill.} \\ \bullet & \text{Furniture to be depreciated by 20\%.} \\ \bullet & \text{Stock should be appreciated by 10\%.} \\ \bullet & \text{Building should be appreciated by 5\%.} \\ \bullet & \text{A provision for 5\% R.D.D. to be created on sundry debtors.} \\ \bullet & \text{Capital accounts of all partners be adjusted in their new profit-sharing ratio through cash account.} \\ \end{array}\] Prepare: \[\begin{array}{rl} \bullet & \text{(a) Revaluation Account} \\ \bullet & \text{(b) Partners' Capital Account} \\ \bullet & \text{(c) New Balance Sheet of the firm} \\ \end{array}\]
- Maharashtra Class XII - 2025
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- Admission of Partner
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