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A and B share profits in the ratio 5:2. After adjustments, the remaining profit is Rs 70,000. What is A’s share?

Answer and explanation

Correct answer: Rs 50,000

The governing concept is distribution of partnership profit according to the agreed profit-sharing ratio. The total ratio is 5 + 2 = 7 parts, of which A is entitled to 5 parts. Therefore, A’s share is calculated as Rs 70,000 × 5/7 = Rs 10,000 × 5 = Rs 50,000. As a check, B’s share is Rs 70,000 × 2/7 = Rs 20,000, and the two shares together equal Rs 70,000. Option B is B’s share, not A’s share. Option C would result from an incorrect equal division, while option D assigns the entire profit to A and ignores B’s entitlement. Hence, option A is correct.

Related tags

Profit RatioProfit DistributionPartnership AccountsRemaining ProfitPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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