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A, B and C share profits in the ratio 4:3:2. D is admitted for a 1/6 share, which is taken entirely from A. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A:B:C:D = 5:6:4:3

The governing principle is that the incoming partner’s share is deducted from the specified sacrificing partner only. The old ratio 4:3:2 totals 9, so A, B and C originally receive 4/9, 3/9 and 2/9. D is admitted for 1/6, and the entire amount is surrendered by A. A’s new share is therefore 4/9 − 1/6. Using denominator 18, this is 8/18 − 3/18 = 5/18. B remains at 3/9 = 6/18, and C remains at 2/9 = 4/18. D receives 1/6 = 3/18. Hence the new ratio is 5:6:4:3, making option A correct. The other options either fail to subtract D’s share from A or simply retain the old ratio without adjustment.

Related tags

AdmissionNew Profit-Sharing RatioSacrificing PartnerNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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