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After the admission of a partner, what is the total of the new profit-sharing ratios of all partners?

Answer and explanation

Correct answer: 1

In a partnership, the entire profit is taken as 1. Therefore, after reconstitution or admission of a partner, the new profit-sharing ratios of all partners must always add up to 1. The values 0 and 1/2 do not represent the whole profit, while the old ratio is not necessarily the ratio under the new arrangement. Exam tip: Always verify that the sum of the new ratios is 1.

Related tags

AdmissionNew-Profit-Sharing-RatioPartnership-ReconstitutionClass-12New Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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