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A and B share profits in the ratio 8:1. C is admitted for a 2/9 share, which is taken entirely from A’s share. What will be the new mutual profit-sharing ratio of A and B?

Answer and explanation

Correct answer: 6:1

In the old ratio 8:1, A’s share was 8/9 and B’s share was 1/9. Since C’s 2/9 share is taken entirely from A, A’s new share becomes 8/9 − 2/9 = 6/9, while B’s share remains 1/9. Therefore, A and B’s new mutual ratio is 6/9 : 1/9 = 6:1. Exam tip: when the incoming partner acquires the share entirely from one existing partner, reduce only that partner’s share.

Related tags

Admission Of PartnerNew Profit Sharing RatioSacrifice RatioPartnership AccountsClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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