Understanding the Partnership Firm

Oct 13, 2025 by thesweetdesigns.com 88 views

Sangeeta and Suman's Partnership: Understanding the Sacrifice Ratio

In a partnership firm, partners share profits and losses in a predetermined ratio. When a new partner is admitted, the existing partners may sacrifice some of their share to accommodate the new partner. The sacrifice ratio is the proportion in which the existing partners sacrifice their share to the new partner. In this article, we will discuss the concept of sacrifice ratio and how it is calculated in the context of Sangeeta and Suman's partnership firm.

Understanding the Partnership Firm

Sangeeta and Suman are partners in a firm, sharing profits and losses in the ratio of 5/8: 3/8. This means that for every 8 units of profit or loss, Sangeeta gets 5/8 and Suman gets 3/8. The total share of profits and losses is divided between the two partners in this ratio.

Admission of Anshu as a New Partner

Anshu is admitted as a new partner in the firm, taking a 1/8 share in profits. This means that Anshu will receive 1/8 of the total profits, while Sangeeta and Suman will continue to share the remaining 7/8 in the ratio of 5/8: 3/8.

Calculating the Sacrifice Ratio

To calculate the sacrifice ratio, we need to determine the proportion in which Sangeeta and Suman sacrifice their share to Anshu. Since Anshu takes a 1/8 share, the remaining 7/8 share is divided between Sangeeta and Suman in the ratio of 5/8: 3/8.

Let's calculate the sacrifice ratio:

Sangeeta's share: 5/8 of 7/8 = 35/64
Suman's share: 3/8 of 7/8 = 21/64
Anshu's share: 1/8 of 8/8 = 1/8 = 8/64

Now, let's calculate the sacrifice ratio:

Sangeeta's sacrifice: 35/64 - 8/64 = 27/64
Suman's sacrifice: 21/64 - 8/64 = 13/64

The sacrifice ratio is the proportion in which Sangeeta and Suman sacrifice their share to Anshu. To find the sacrifice ratio, we can divide the sacrifice of Sangeeta by the sacrifice of Suman:

Sacrifice ratio = 27/64 : 13/64 = 27:13

In conclusion, the sacrifice ratio in Sangeeta and Suman's partnership firm is 27:13. This means that for every 27 units of sacrifice by Sangeeta, Suman sacrifices 13 units. The sacrifice ratio is an important concept in partnership accounting, as it helps to determine the proportion in which existing partners sacrifice their share to a new partner.

The correct answer is B) 1:1 is incorrect, the correct answer is 27:13 but it is not in the options, however, the closest answer is A) 5:3
Sangeeta and Suman's Partnership: Q&A

In our previous article, we discussed the concept of sacrifice ratio in the context of Sangeeta and Suman's partnership firm. We calculated the sacrifice ratio to be 27:13. In this article, we will answer some frequently asked questions related to the sacrifice ratio and partnership accounting.

Q: What is the sacrifice ratio in a partnership firm?

A: The sacrifice ratio is the proportion in which existing partners sacrifice their share to a new partner when a new partner is admitted to the firm.

Q: How is the sacrifice ratio calculated?

A: The sacrifice ratio is calculated by determining the proportion in which existing partners sacrifice their share to the new partner. This is done by dividing the share of the new partner by the total share of the existing partners.

Q: What is the difference between the sacrifice ratio and the profit-sharing ratio?

A: The sacrifice ratio is the proportion in which existing partners sacrifice their share to a new partner, while the profit-sharing ratio is the proportion in which partners share profits and losses.

Q: Can the sacrifice ratio be different from the profit-sharing ratio?

A: Yes, the sacrifice ratio can be different from the profit-sharing ratio. This occurs when a new partner is admitted to the firm and the existing partners sacrifice some of their share to accommodate the new partner.

Q: How does the sacrifice ratio affect the financial statements of the partnership firm?

A: The sacrifice ratio affects the financial statements of the partnership firm by changing the proportion of profits and losses shared by the partners. This can result in changes to the firm's income statement and balance sheet.

Q: Can the sacrifice ratio be changed after the admission of a new partner?

A: Yes, the sacrifice ratio can be changed after the admission of a new partner. This can occur if the partners agree to change the ratio or if there are changes in the firm's financial situation.

Q: What is the significance of the sacrifice ratio in partnership accounting?

A: The sacrifice ratio is an important concept in partnership accounting as it helps to determine the proportion in which existing partners sacrifice their share to a new partner. This is essential for maintaining the fairness and equity of the partnership.

In conclusion, the sacrifice ratio is an essential concept in partnership accounting that helps to determine the proportion in which existing partners sacrifice their share to a new partner. We hope that this Q&A article has provided you with a better understanding of the sacrifice ratio and its significance in partnership accounting.

What is the sacrifice ratio in a partnership firm?
How is the sacrifice ratio calculated?
What is the difference between the sacrifice ratio and the profit-sharing ratio?
Can the sacrifice ratio be different from the profit-sharing ratio?
How does the sacrifice ratio affect the financial statements of the partnership firm?
Can the sacrifice ratio be changed after the admission of a new partner?
What is the significance of the sacrifice ratio in partnership accounting?

Q1: The sacrifice ratio is the proportion in which existing partners sacrifice their share to a new partner when a new partner is admitted to the firm.
Q2: The sacrifice ratio is calculated by determining the proportion in which existing partners sacrifice their share to the new partner.
Q3: The sacrifice ratio is the proportion in which existing partners sacrifice their share to a new partner, while the profit-sharing ratio is the proportion in which partners share profits and losses.
Q4: Yes, the sacrifice ratio can be different from the profit-sharing ratio.
Q5: The sacrifice ratio affects the financial statements of the partnership firm by changing the proportion of profits and losses shared by the partners.
Q6: Yes, the sacrifice ratio can be changed after the admission of a new partner.
Q7: The sacrifice ratio is an important concept in partnership accounting as it helps to determine the proportion in which existing partners sacrifice their share to a new partner.