Question

Sacrifice ratio means:

• A. New Ratio - Old Ratio
• B. Old Ratio - New Ratio
• C. Old Ratio - Gaining Ratio
• D. Gaining Ratio - Old Ratio

Hint:

The sacrifice ratio is crucial in partnership accounting to adjust the new partner's share and calculate compensation for the existing partners.

Answer 1

The Correct Option is B

Step 1: Understanding the sacrifice ratio.
The sacrifice ratio indicates the proportion of profit sacrificed by the existing partners in favor of the new partner. It is calculated as: \[ \text{Sacrifice Ratio} = \text{Old Ratio} - \text{New Ratio} \]

Step 2: Identifying the correct formula.
From the options provided, the correct definition matches \( \text{Old Ratio - New Ratio} \), which is option (B). Other options do not represent the correct formula for the sacrifice ratio.