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If a new partner is admitted for a 1/5 share, what should be the total of all partners' new shares?

Answer and explanation

Correct answer: 1

The governing concept is that the complete profit of the reconstituted partnership represents one whole, or 100 percent. Admission changes the distribution among partners but does not change the total amount available for sharing. Thus, if the incoming partner receives 1/5, the existing partners together receive the remaining 4/5, and 1/5 + 4/5 = 1. Therefore the total of all partners' new shares must be 1, making option A correct. Option B is only the new partner's share, C is only the combined share of the old partners, and D is an unnormalized expression rather than the total share.

Related tags

AdmissionNew-Profit-Sharing-RatioTotal-SharePartnershipNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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