Give any three points of distinction between sacrificing and gaining ratio.
|Basis of Difference||Sacrificing ratio||Gaining Ratio|
|1. Meaning||It is the ratio in which old partners agree to sacrifice their share of profit in favour of new partners/partner||It is the ratio in which continuing partner acquires the share of profit from outgoing partner/partner|
|2. Calculation||Sacrificing Ratio = Old Ratio – New Ratio||Gaining Ratio = New Ratio – Old Ratio|
|3. Time||It is calculated at the time of admission of new partners/partner.||It is calculated at the time of retirement/death of old partners/partner.|
|4. Objective||It is calculated to ascertain the share of profit and loss given up by the existing partners in favour of new partners/partner.||It is calculated to ascertain the share of profit and loss acquired by the remaining partners (of the new firm in case of retirement) from the retiring or deceased partner.|
|5. Effect||It reduces the profit share of the existing partners.||It increases the profit share of the remaining partners.|