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A and B share profits in the ratio 2:5. C is admitted for a 1/7 share, which is taken from B. What is the new mutual ratio of A and B?

Answer and explanation

Correct answer: 1:2

The governing concept is that the admitted partner’s share is deducted from the specified sacrificing partner, while the other existing partner’s share remains unchanged. The old ratio 2:5 totals 7, so A’s old share is 2/7 and B’s old share is 5/7. C receives 1/7 entirely from B. Therefore B’s new share is 5/7 − 1/7 = 4/7, while A continues to receive 2/7. The new mutual ratio of A and B is 2/7:4/7 = 2:4, which simplifies to 1:2. Hence option A is correct. Option B is merely the old ratio. Options C and D do not represent the stated deduction of 1/7 from B’s share.

Related tags

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

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