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The old partners share profits in the ratio 4:1, and the new partner takes \(1/5\) of the profits. If the new partner’s share is sacrificed by the old partners in their old ratio, what is the first old partner’s sacrifice?

Answer and explanation

Correct answer: \(\frac{4}{25}\)

The first partner’s old profit share is \(\frac{4}{5}\). Therefore, his portion of the new partner’s \(\frac{1}{5}\) share is \(\frac{1}{5}\times\frac{4}{5}=\frac{4}{25}\). Option C incorrectly treats the entire new partner’s share as the first partner’s sacrifice. Exam tip: when sacrifice is in the old ratio, multiply the incoming partner’s share by each old partner’s old fraction.

Related tags

Admission Of PartnerNew Profit Sharing RatioSacrifice RatioPartnership AccountsClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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