Commerce Exam  >  Commerce Questions  >   Directions : In the following questions, a s... Start Learning for Free
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.
Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.
  • a)
    Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
  • b)
    Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
  • c)
    Assertion (A) is true, but Reason (R) is false .
  • d)
    Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Directions : In the following questions, a statement of Assertion (A)...
At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners, as the gaining partners need to compensate the sacrificing partners.
View all questions of this test
Most Upvoted Answer
Directions : In the following questions, a statement of Assertion (A)...
Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.

Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.

Explanation:

  1. Profit Sharing Ratio: The profit sharing ratio is the proportion in which the partners divide the profits and losses of a partnership. It determines how much each partner is entitled to receive from the profits of the business.

  2. Change in Profit Sharing Ratio: When there is a change in the profit sharing ratio, it means that the partners have decided to alter the way they share the profits and losses. This can happen due to various reasons such as a change in capital contributions, changes in responsibilities, or changes in the partnership agreement.

  3. Sacrificing Ratio: The sacrificing ratio is the ratio in which the partners who are sacrificing their share of profits compensate the gaining partners. It determines the amount of profit that the sacrificing partners will forego in favor of the gaining partners.

  4. Gaining Ratio: The gaining ratio is the ratio in which the gaining partners receive additional share of profits from the sacrificing partners. It determines the increase in profit that the gaining partners will receive due to the sacrifice of the sacrificing partners.

  5. Determination of Sacrificing Ratio: To determine the sacrificing ratio, the partners need to calculate the difference between the old profit sharing ratio and the new profit sharing ratio. The partners who are sacrificing their share will have a higher proportion in the old ratio compared to the new ratio.

  6. Determination of Gaining Ratio: The gaining ratio is determined by subtracting the sacrificing ratio from the new profit sharing ratio. This represents the additional share of profits that the gaining partners will receive.

  7. Compensation through Goodwill: The gaining partners compensate the sacrificing partners for their sacrifice by paying them an appropriate amount of goodwill. Goodwill is an intangible asset that represents the value of the reputation and customer base of a business. It is calculated as the difference between the total value of the business and the sum of its identifiable assets.

  8. Importance of Determining Sacrificing and Gaining Ratio: It is important to determine the sacrificing and gaining ratio of partners at the time of change in profit sharing ratio because it ensures that the interests of all partners are taken into account and that the change is implemented in a fair and equitable manner. By compensating the sacrificing partners through goodwill, the gaining partners acknowledge the value of their sacrifice and maintain the harmony and trust within the partnership.



Conclusion:
Both the Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). It is important to determine the sacrificing ratio and gaining ratio of partners at the time of change in profit sharing ratio, and the gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.
Free Test
Community Answer
Directions : In the following questions, a statement of Assertion (A)...
Ans a
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
Explore Courses for Commerce exam

Top Courses for Commerce

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?
Question Description
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?.
Solutions for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?, a detailed solution for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): At the time of change in profit sharing ratio, it is important to determine the sacrificing ratio and gaining ratio of partners.Reason (R): The gaining partners compensate the sacrificing partners by paying them an appropriate amount of goodwill.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice Commerce tests.
Explore Courses for Commerce exam

Top Courses for Commerce

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev