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A and B's capitals are to be in the profit-sharing ratio 7 : 3. The total capital is Rs 4,00,000. What is A's required capital?

Answer and explanation

Correct answer: Rs 280,000

Total profit-sharing ratio = 7 + 3 = 10. A's share = 7/10. Therefore A's required capital = (7/10) × Rs 400,000 = Rs 280,000. Among distractors, Rs 200,000 would arise if someone incorrectly assumed equal halves (1:1), and Rs 120,000 equals 3/10 which is B's share. Exam tip: add the ratio parts first, then multiply the required partner's ratio fraction by total capital.

Related tags

Capital AdjustmentProfit RatioRequired CapitalPartnership AccountsCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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