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A and B share profits in the ratio 7:3. When C is admitted, the new profit-sharing ratio becomes 4:4:2. What is A’s sacrificing ratio?

Answer and explanation

Correct answer: \(\frac{3}{10}\)

A’s old profit share was \(\frac{7}{10}\), while under the new ratio 4:4:2, A’s share is \(\frac{4}{10}\). Therefore, A’s sacrificing share = old share − new share = \(\frac{7}{10}-\frac{4}{10}=\frac{3}{10}\). The \(\frac{2}{10}\) in option C is C’s new share, not A’s sacrifice. Exam tip: For an existing partner, sacrificing share = old share − new share.

Related tags

Partnership AccountsGoodwillAdmission Of PartnerSacrificing RatioPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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