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A and B share profits in the ratio 4:7. C is admitted and receives a \(\frac{2}{11}\) share of profits entirely from B’s share. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 4:5:2

Under the old ratio 4:7, A’s share is \(\frac{4}{11}\) and B’s share is \(\frac{7}{11}\). Since C receives \(\frac{2}{11}\) entirely from B, B’s new share becomes \(\frac{7}{11}-\frac{2}{11}=\frac{5}{11}\). Thus, the new shares of A, B and C are \(\frac{4}{11}:\frac{5}{11}:\frac{2}{11}\), giving the new ratio 4:5:2. Option B is incorrect because it does not deduct C’s share from B. Exam tip: If an incoming partner obtains a share from only one old partner, subtract that share from that partner’s old share and leave the others unchanged.

Related tags

New Profit Sharing RatioAdmission Of PartnerShare Sacrificed By PartnerPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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