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In a firm, the old partners’ profit-sharing ratio was 3:2. On the admission of a new partner, the first old partner’s new share becomes \(\frac{2}{5}\), the second old partner’s new share becomes \(\frac{1}{5}\), and the new partner receives \(\frac{2}{5}\) of the profits. What is the sacrificing ratio of the old partners?

Answer and explanation

Correct answer: 1:1

Under the old ratio of 3:2, the old partners’ shares were \(\frac{3}{5}\) and \(\frac{2}{5}\). Sacrifice = old share − new share. Thus, the first partner sacrifices \(\frac{3}{5}-\frac{2}{5}=\frac{1}{5}\), while the second sacrifices \(\frac{2}{5}-\frac{1}{5}=\frac{1}{5}\). Therefore, the sacrificing ratio is \(\frac{1}{5}:\frac{1}{5}=1:1\). Option B is the old ratio, not the sacrificing ratio. Exam tip: calculate the reduction in each old partner’s share separately.

Related tags

Admission Of PartnerSacrificing RatioGoodwill AccountingOld RatioNew RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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