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After the admission of a partner, what should be the sum of the shares of all partners in the new profit-sharing ratio?

Answer and explanation

Correct answer: 1

In the new profit-sharing ratio, the shares of all partners together represent the entire profit. The entire profit is taken as 1 or 100%, so the sum of all shares must be 1. The value 1/2 represents only half the profit, while 0 and 2 represent zero and more than the entire profit, respectively. In an exam, convert the ratio into fractions and check that their sum is 1.

Related tags

AdmissionNew Profit Sharing RatioPartnership AccountsClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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