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What is the trick to remember the calculation of Sacrificing Ratio in Partnership Accounting ?

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asked Oct 26, 2016 by Anil (520 points)
On the admission of a new Partner the Old Partners have to give up a certain portion of their profits in favour of the New Partners. This is termed as "Sacrificing Ratio"

What is the trick to remember the calculation of Sacrificing Ratio in Partnership Accounting ?

1 Answer

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answered Oct 26, 2016 by Anil (520 points)
Remember sacrifice is the act of loosing something existing.

Here the old partners are sacrificing  a part of their profit due to the admission of a new partner, or the old share or Ratio is changing to a new share or New Ratio.

Hence we have to remember Old share is greater than the new share, when the number of partners are more due to the admission.

Therefore, Sacrificing Ratio = Old Ratio - New Ratio or the Trick is to remember SR = OR-NR

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