Gain ratio in Class 12 Accountancy means the ratio in which the continuing partners gain the share of an outgoing partner. It is usually calculated as new profit-sharing ratio - old profit-sharing ratio for each continuing partner.

Quick Scoop

If a partner retires or dies, the remaining partners may share the business profits in a new ratio. The gain ratio shows how much each remaining partner’s share has increased.

Formula

Gain Ratio = New Profit Sharing Ratio - Old Profit Sharing Ratio.

Example

If A and B used to share profits in 1:2 and after retirement they share in 3:2, then first convert both ratios into fractions and subtract. The result tells how much each partner has gained.

Why it matters

  • It is used in retirement and death of a partner questions in Class 12 Accountancy.
  • It helps decide how goodwill and other adjustments should be shared between the continuing partners.

One-line meaning

The gain ratio is the ratio in which the remaining partners acquire the share of the outgoing partner.

If you want, I can also give you a very short exam answer , a numerical example , or the difference between sacrificing ratio and gaining ratio.