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A and B share profits in the ratio 7:2. C is admitted for a \(1/3\) share of the profits. The remaining profit will be shared by A and B in the ratio 3:1. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C = 3 : 1 : 2

C receives \(1/3\) of the profit, so the balance left for A and B is \(1 - 1/3 = 2/3\). This balance is divided in the ratio 3:1; therefore, A receives \(2/3 \times 3/4 = 1/2\) and B receives \(2/3 \times 1/4 = 1/6\). Thus, A:B:C = \(1/2:1/6:1/3\) = 3:1:2. Option B incorrectly uses the old ratio 7:2 directly as part of the new ratio. Exam tip: subtract the incoming partner’s share from one, then divide the remaining share according to the specified ratio of the old partners.

Related tags

Admission Of PartnerNew Profit Sharing RatioProfit Sharing RatioReconstitutionAccountancy Class 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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