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A and B shared profits in the ratio 7:3. After C was admitted, the new profit-sharing ratio became 6:2:2. On what basis was C’s share obtained from A and B?

Answer and explanation

Correct answer: Through equal sacrifice by both

Under the old ratio, A’s share was 7/10 and B’s share was 3/10. Under the new ratio, A’s share is 6/10 and B’s share is 2/10. Therefore, A’s sacrifice is 7/10 − 6/10 = 1/10, and B’s sacrifice is 3/10 − 2/10 = 1/10. Since both partners sacrificed equally, C’s 2/10 share was obtained through equal sacrifice. Exam tip: Subtract each old partner’s new share from the old share to find the sacrifice ratio.

Related tags

New Profit Sharing RatioSacrifice RatioAdmission Of PartnerEqual SacrificePartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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