Commerce Exam > Commerce Questions > When the New ratio is deducted with Old Ratio...
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When the New ratio is deducted with Old Ratio we get:
- a)New Ratio
- b)Old Ratio
- c)Sacrifice only
- d)Gain Ratio
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old ...
Gaining ratio is calculated by deducting the old ratio from the new ratio. The following formula is used to calculate the gain ratio.
Gaining ratio = New ratio – old ratio
Gaining ratio = New ratio – old ratio
Most Upvoted Answer
When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old ...
Becoz in this, one or more partners gain share of profit as a result of sacrificed share in profit by one or more partners of the firm
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Community Answer
When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old ...
Explanation:
In accounting, when a partnership firm undergoes a change in its partnership agreement, such as admission of a new partner or retirement of an existing partner, the ratios of the partners' capital or profit-sharing may change. These changes are reflected in the new ratio and the old ratio.
Definition of Ratios:
Ratios in this context refer to the proportionate distribution of capital or profits among the partners of a partnership firm. Ratios determine the share of each partner in the firm's assets, liabilities, and profits.
Deducing the New Ratio:
When the new ratio is being determined, it takes into account the changes in the partnership agreement. For example, if a new partner is admitted, their capital contribution and profit-sharing percentage will be considered in the new ratio calculation.
Deducing the Old Ratio:
The old ratio refers to the ratio that existed before any changes were made in the partnership agreement. It represents the proportionate distribution of capital or profits among the partners prior to the change.
Calculation:
To calculate the new ratio, the new partners' capital contributions or profit-sharing percentages are added to the existing partners' proportions. On the other hand, the old ratio is calculated by deducting the new ratio from the existing ratio.
Importance of Deducting the Ratios:
Deducting the new ratio from the old ratio helps in determining the change in the proportions of the partners' capital or profit-sharing. This change is known as the gain ratio. The gain ratio indicates the extent to which the existing partners' proportions have changed due to the admission or retirement of a partner. It represents the share of the firm's profits that the existing partners have gained or lost as a result of the change.
Conclusion:
In summary, when the new ratio is deducted from the old ratio, we calculate the gain ratio. The gain ratio helps in understanding the impact of changes in the partnership agreement on the existing partners' proportions. By deducting the ratios, we can determine the extent of the change and analyze the distribution of profits among the partners.
In accounting, when a partnership firm undergoes a change in its partnership agreement, such as admission of a new partner or retirement of an existing partner, the ratios of the partners' capital or profit-sharing may change. These changes are reflected in the new ratio and the old ratio.
Definition of Ratios:
Ratios in this context refer to the proportionate distribution of capital or profits among the partners of a partnership firm. Ratios determine the share of each partner in the firm's assets, liabilities, and profits.
Deducing the New Ratio:
When the new ratio is being determined, it takes into account the changes in the partnership agreement. For example, if a new partner is admitted, their capital contribution and profit-sharing percentage will be considered in the new ratio calculation.
Deducing the Old Ratio:
The old ratio refers to the ratio that existed before any changes were made in the partnership agreement. It represents the proportionate distribution of capital or profits among the partners prior to the change.
Calculation:
To calculate the new ratio, the new partners' capital contributions or profit-sharing percentages are added to the existing partners' proportions. On the other hand, the old ratio is calculated by deducting the new ratio from the existing ratio.
Importance of Deducting the Ratios:
Deducting the new ratio from the old ratio helps in determining the change in the proportions of the partners' capital or profit-sharing. This change is known as the gain ratio. The gain ratio indicates the extent to which the existing partners' proportions have changed due to the admission or retirement of a partner. It represents the share of the firm's profits that the existing partners have gained or lost as a result of the change.
Conclusion:
In summary, when the new ratio is deducted from the old ratio, we calculate the gain ratio. The gain ratio helps in understanding the impact of changes in the partnership agreement on the existing partners' proportions. By deducting the ratios, we can determine the extent of the change and analyze the distribution of profits among the partners.
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Question Description
When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old Ratioc)Sacrifice onlyd)Gain RatioCorrect answer is option 'D'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old Ratioc)Sacrifice onlyd)Gain RatioCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old Ratioc)Sacrifice onlyd)Gain RatioCorrect answer is option 'D'. Can you explain this answer?.
When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old Ratioc)Sacrifice onlyd)Gain RatioCorrect answer is option 'D'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old Ratioc)Sacrifice onlyd)Gain RatioCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When the New ratio is deducted with Old Ratio we get:a)New Ratiob)Old Ratioc)Sacrifice onlyd)Gain RatioCorrect answer is option 'D'. Can you explain this answer?.
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