Ch 5 · Partnership Accounts

5 concept points · 5 formulas · 4 exam-critical points.

🧮 Formula sheet

1. Sacrificing Ratio = Old Ratio − New Ratio
2. Gaining Ratio = New Ratio − Old Ratio
3. Goodwill (Avg Profit Method) = Average Profit × Number of years' purchase
4. Goodwill (Super Profit) = Super Profit × No. of years
5. Super Profit = Average Profit − Normal Profit (Capital × Normal Rate)