If last year profit was distributed in a wrong ratio what will be the main basis of correction?

Correct answer: Correct share and share already distributed

The direct answer is option A: compare the correct share with the share already distributed. When profit has been divided in the wrong ratio, the first task is to find what each partner should have received under the correct ratio. The second task is to identify what each partner actually received. For every partner, calculate: correct share minus amount already distributed. A positive difference means that partner must receive more; a negative difference means that partner has received too much and must give back or be debited. This difference is the basis of the correction entry. Option A is correct. Option B, bank passbook and cash book, may help verify cash transactions but cannot determine the partners’ correct profit shares. Option C, quantity of purchases and sales, relates to business activity, not the agreed profit-sharing ratio. Option D, lists of customers and creditors, concern relationships and liabilities, not distribution of partnership profit. Memory cue: correction means correct amount compared with amount already given.