What is meant by Change in Profit Sharing Ratio? State any two circumstances when there is a need to change the profit sharing ratio.
What is meant by Change in Profit Sharing Ratio? State any two circumstances when there is a need to change the profit-sharing ratio.
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Change in profit sharing ratio means transfer of share of profit by one partner to another partner or to an incoming partner.
The need for change in profit sharing ratio arises under the following circumstances:
(i) When a partner is admitted, or
(ii) When a partner retires/dies
(iii) Existing partners changes profit sharing ratio willingly
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