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The partners’ new shares are 1/2, 1/4 and 1/4. What is their new profit-sharing ratio?

Answer and explanation

Correct answer: 2:1:1

The direct answer is 2:1:1, so option A is correct. To convert fractional shares into a whole-number ratio, multiply all fractions by their least common denominator. The denominators are 2, 4, and 4, whose least common multiple is 4. Multiplying each share by 4 gives (1/2)×4=2, (1/4)×4=1, and (1/4)×4=1. Therefore the new profit-sharing ratio is 2:1:1. Check the result by adding the ratio parts: 2+1+1=4. The corresponding fractions are 2/4, 1/4, and 1/4, exactly the given shares. Option B changes the order of the partners, so it assigns the half share to the wrong person. Option C also changes the order. Option D does not preserve the given fractions because 4:2:1 has total 7 and represents 4/7, 2/7, and 1/7. The memory cue is: use a common denominator, then remove the denominator.

Related tags

New-Profit-Sharing-RatioFraction-To-RatioPartnership-AccountsAdmissionNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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