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A and B share profits in the ratio 11:5. C is admitted and receives 1/4 of the total profit share exclusively from A. What will be the new profit-sharing ratio of A:B:C?

Answer and explanation

Correct answer: 7:5:4

The old ratio 11:5 has a total of 16 parts, so A’s old share is 11/16 and B’s share is 5/16. C receives 1/4 = 4/16 exclusively from A; therefore, A’s new share is 11/16 − 4/16 = 7/16. B’s share remains 5/16, while C receives 4/16. Hence, the new ratio is 7:5:4. Exam tip: When the incoming partner obtains the entire share from only one old partner, only that partner’s share is reduced.

Related tags

Partner AdmissionNew Profit Sharing RatioSacrifice RatioAccountancy Class 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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