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A and B share profits in the ratio 3:2. C is admitted for a 1/5 share of profits, which is sacrificed equally by A and B. What will be the sacrificing ratio of A and B?

Answer and explanation

Correct answer: 1:1

C’s 1/5 share is sacrificed equally by A and B, so each sacrifices 1/10. Therefore, their sacrificing ratio is 1/10:1/10 = 1:1. The ratio 3:2 is the old profit-sharing ratio, not the sacrificing ratio. Exam tip: Determine the sacrificing ratio from the shares surrendered by the old partners for the incoming partner.

Related tags

Partnership AccountsGoodwillSacrificing RatioAdmission Of PartnerPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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