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Question
Select the most appropriate answer from the alternatives given below :
Gaining ratio is calculated on ___________.
Options
admission of a partner
retirement of a partner
death of a partner
retirement or death of a partner
Solution
Gaining ratio is calculated on retirement or death of a partner.
Explanation: The gaining ratio is calculated for adjusting the retiring or deceased partner’s share of goodwill. The remaining partners compensate the outgoing partner (retiring or deceased as the case may be) by payment of premium for goodwill in the ratio in which they gain.
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RELATED QUESTIONS
When is gain ratio required to be calculated ?
The proportion in which the continuing partners are benefitted due to retirement of a partner.
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State whether the following statements is true or false :
Gaining ratio means old ratio minus new ratio.
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What is gaining ratio or benefit ratio?
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