Question

On dissolution of a partnership firm, profit or loss on realisation is distributed among the partners:

• A. In Capital ratio
• B. In profit sharing ratio
• C. In sacrificing ratio
• D. Equally

Hint:

Realisation profit/loss is just another business result — shared like any trading profit, in the profit-sharing ratio.

Answer 1

The Correct Option is B

Step 1: Rule out the distractors:
Capital ratio would only apply if the deed specifically said so, sacrificing ratio is used solely at admission of a new partner, and ‘equally’ has no legal basis unless partners happened to share profits equally anyway.

Step 2: Confirm the default rule:
Absent a special agreement, Section 48 of the Partnership Act and standard accounting practice both route realisation profit/loss through the partners' capital accounts using the same ratio they used for regular profits.

Final Answer:
(B) In profit sharing ratio.