the goodwill brought in cash will be shared by old partners in _____.
(a) old profit sharing ratio.
(b) new profit sharing ratio.
(c) sacrificing ratio.
(d) capital ratio.
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Answer:
sacrificing ratio
Explanation:
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The goodwill brought in cash will be shared by old partners in old profit sharing ratio.
Extra Information:
Old Profit Sharing Ratio =>
It is the ratio before a new partner joins and is getting shared between old partners.
New Profit Sharing Ratio =>
It is the ratio in which when a new partner joins with the old partners and agrees for sharing profit and loss percentage in future.
Sacrificing Ratio =>
It is the ratio in which the old partners give their share of profit in favour of new partner who has joined.
Sacrificing Ratio = Old Ratio – New Ratio
Capital Ratio =>
It is the ratio in which a business can pay for future sacrifices based on their current assets.
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