Question : Choose which of the following statements is correct in relation with sacrifice ratio.
Option 1: Sacrificing Ratio is the ratios in which one or more partners of the firm forego, i.e., sacrifice their profit share(s) in favor of one or more partners of the firm.
Option 2: Sacrificed Profit Share = Old Profit Share - New Profit Share
Option 3: Both 1 and 2
Option 4: All of the above
Correct Answer: Both 1 and 2
Solution : Answer = Both 1 and 2
Statement A defines the sacrificing ratio as the ratio in which partners sacrifice their profit shares. Statement B provides the formula to calculate the sacrificed profit share, which is the difference between the old and new profit shares of a partner.
Hence, the correct option is 3.
