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In the new profit-sharing ratio 5:4:3, the new partner has the third share. What will be his share in the firm's total profit?

Answer and explanation

Correct answer: 3/12

The total ratio is 5 + 4 + 3 = 12. Since the new partner has the third share, his profit-sharing fraction is 3/12, which is equal to 1/4. The fractions 4/12 and 5/12 represent the second and first partners respectively, while 1/4 is less than 1/3. Exam tip: Divide a partner’s ratio term by the sum of all ratio terms to find that partner’s share.

Related tags

AdmissionNew Profit Sharing RatioPartnership AccountsClass 12AccountancyReconstitution Admission Of A PartnerClass 12 Mcq

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