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Which is the most useful step for checking the accuracy of the new profit-sharing ratio?

Answer and explanation

Correct answer: Add all the new profit-sharing fractions

The sum of all fractions in the new profit-sharing ratio must be 1, or the whole share. Therefore, adding all the new fractions is the primary check of the ratio. Capital or cash alone does not determine the profit-sharing ratio. In an exam, always verify the sum of the fractions after calculating the ratio.

Related tags

AccountancyAdmission Of PartnerNew Profit-Sharing RatioPartnership AccountsClass 12New Profit Sharing RatioReconstitution Admission Of A PartnerClass 12 Mcq

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