Subject: Accountancy • Chapter: 4 (Change in Profit Sharing Ratio) • Board: CBSE/NCERT • Session: 2025–26
The chapter Change in Profit Sharing Ratio Among the Existing Partners explains how to adjust partners’ accounts when the profit-sharing ratio is changed due to mutual agreement. These handwritten notes (PDF) cover goodwill adjustment, reserves distribution, revaluation of assets and liabilities, and capital account adjustments as per the CBSE Class 12 syllabus (2025–26).
📘 Chapter Index — Topics Covered
- Meaning of Change in Profit Sharing Ratio
- Causes of Change in Ratio
- Calculation of Sacrificing and Gaining Ratio
- Treatment of Goodwill
- Revaluation of Assets and Liabilities
- Adjustment of Reserves and Accumulated Profits
- Adjustment of Capital Accounts
- Journal Entries for all Adjustments
- Illustrative Questions and Solved Examples
🧠 Key Concepts Explained
- Gaining Ratio: The ratio in which partners gain due to change in profit sharing ratio.
- Sacrificing Ratio: The ratio in which partners sacrifice a portion of their profit for others.
- Goodwill Adjustment: The gaining partner compensates the sacrificing partner for the gain in profit share.
- Revaluation Account: Used to record the change in value of assets and liabilities at the time of change in ratio.
⭐ Features of These Notes
- Handwritten and colorful for quick revision.
- Clear explanation of sacrificing and gaining ratios.
- Includes CBSE exam-style questions and journal entries.
- Concept summary with easy examples and illustrations.
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📥 Download Chapter 4 – Change in Profit Sharing Ratio (Handwritten Notes PDF)
💡 Important Formulas
- Sacrificing Ratio:
Old Ratio – New Ratio - Gaining Ratio:
New Ratio – Old Ratio - Goodwill Compensation:
Total Goodwill × Sacrificing Partner’s Share - Revaluation Profit/Loss:
Increase or decrease in asset and liability values.
📚 Journal Entries
- For Goodwill Adjustment:
Gaining Partner’s Capital A/c Dr. → To Sacrificing Partner’s Capital A/c - For Revaluation Profit:
Revaluation A/c Dr. → To Partners’ Capital A/c - For Reserves:
General Reserve A/c Dr. → To Partners’ Capital A/c
📖 Study Tips
- Always find the sacrificing/gaining ratio before any goodwill adjustment.
- Practice revaluation account with various asset/liability adjustments.
- Understand how accumulated profits and reserves are distributed.
- Revise journal entries regularly for clarity and accuracy.
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FAQ
Q1. What is the main reason for change in profit sharing ratio among existing partners?
The ratio changes when partners agree to alter their profit-sharing agreement due to capital contribution, experience, or new partner admission.
Q2. What is the difference between sacrificing ratio and gaining ratio?
Sacrificing ratio shows the portion of profit a partner gives up, while gaining ratio shows the portion another partner gains in return.
Q3. Why is goodwill adjusted during change in profit sharing ratio?
Goodwill is adjusted to compensate partners who sacrifice their share of profits in favor of others.
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