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A and B share profits in the old ratio of 7:3, while their new ratio is 3:2. Which partner is sacrificing due to this change?

Answer and explanation

Correct answer: A is sacrificing

A’s old share was 7/10, whereas his new share is 3/5, or 6/10. Thus, A’s share decreases by 1/10, so A is the sacrificing partner. In contrast, B’s share increases from 3/10 to 4/10, making B the gaining partner. For exams, compare each partner’s new share with the old share: a decrease indicates sacrifice, while an increase indicates gain.

Related tags

GoodwillChange-In-RatioSacrificing-PartnerPartnership-AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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