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Partner A's old share of profit is \(\frac{3}{5}\). If A sacrifices \(\frac{1}{10}\) share in favour of the new partner, what will be A's new profit-sharing share?

Answer and explanation

Correct answer: \(\frac{1}{2}\)

On admission of a new partner, the old partner's new share equals the old share minus the share sacrificed. Thus, A's new share is \(\frac{3}{5}-\frac{1}{10}=\frac{6}{10}-\frac{1}{10}=\frac{5}{10}=\frac{1}{2}\). \(\frac{7}{10}\) results from addition, so it is incorrect. Exam tip: subtract the sacrificed share from the old share.

Related tags

Admission Of A PartnerNew Profit Sharing RatioSacrifice RatioPartner ShareClass 12 AccountancyReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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