In goodwill adjustment on change in profit sharing ratio who is debited when one partner gains?

Correct answer: Gaining partner

When partners change their profit-sharing ratio, one or more partners may receive a larger share of future profits. Such a partner is called the gaining partner. Another partner may give up part of the former share and is called the sacrificing partner. Goodwill adjustment makes the gaining partner compensate the sacrificing partner for the benefit received. Therefore, the gaining partner’s capital or current account is debited, while the sacrificing partner’s account is credited. Option A is correct.

For example, if a partner gains a share worth ₹10,000 and another partner sacrifices that share, the gaining partner bears the adjustment and the sacrificing partner receives compensation. The entry is made in the gaining partner’s account on the debit side and in the sacrificing partner’s account on the credit side, usually in the gaining ratio and sacrificing ratio as applicable. The bank account is not normally involved in this internal adjustment, and all partners are not debited equally unless the facts specifically require it. Hence the given answer follows.