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A and B share profits in the ratio 5:4. After the admission of a new partner C, the new profit-sharing ratio becomes 7:6:5. What will be A’s new share of profit?

Answer and explanation

Correct answer: \(\frac{7}{18}\)

The sum of the terms in the new profit-sharing ratio 7:6:5 is 18. Since A’s term is 7, A’s new share is \(\frac{7}{18}\). The old ratio 5:4 is not needed because the complete new ratio is already given. Exam tip: A partner’s share equals that partner’s ratio term divided by the sum of all new ratio terms.

Related tags

New Profit Sharing RatioAdmission Of PartnerPartner ShareRatio CalculationReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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