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A and B share profits in the ratio 5:6. They decide to admit C for a \(\frac{2}{11}\) share of the total profits. C’s share is acquired equally from A and B, with \(\frac{1}{11}\) taken from each. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C = 4 : 5 : 2

In the old ratio 5:6, A’s share is \(\frac{5}{11}\) and B’s share is \(\frac{6}{11}\). Since C receives \(\frac{1}{11}\) from each partner, A’s new share is \(\frac{4}{11}\), B’s is \(\frac{5}{11}\), and C’s is \(\frac{2}{11}\). Therefore, the new ratio is 4:5:2. Option B is incorrect because it does not deduct C’s share from A and B. Exam tip: subtract each partner’s sacrifice from the old share, then write the new partner’s admitted share.

Related tags

AccountancyPartner-AdmissionNew-Profit-Sharing-RatioSacrifice-RatioPartnership-FundamentalsNew Profit Sharing RatioReconstitution Admission Of A PartnerClass 12 Mcq

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