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After the admission of a partner, the new profit-sharing ratio is 3:2:1. What is the correct way to convert it into each partner’s share of profit?

Answer and explanation

Correct answer: Divide each ratio part by the total parts, 6

The total parts in the new ratio 3:2:1 are 3+2+1=6. Therefore, the partners’ profit shares are 3/6, 2/6 and 1/6 respectively, which can also be written as 1/2, 1/3 and 1/6. Option B is incorrect because each ratio part must be divided by the sum of all parts, not by the largest part. Exam tip: To convert any ratio into fractions, divide each part by the total of the ratio parts.

Related tags

New Profit Sharing RatioRatio ConversionAdmission Of PartnerProfit SharingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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