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A and B share profits in the ratio 7:5. C is admitted for a \(1/6\) share of the total profit, and A and B sacrifice this share equally. What will be the new profit-sharing ratio?

Answer and explanation

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

A and B’s old shares are \(7/12\) and \(5/12\), respectively. C receives \(1/6=2/12\) of the total profit. Since A and B sacrifice this share equally, each sacrifices \(1/12\). Therefore, A’s new share is \(7/12-1/12=6/12\), B’s is \(5/12-1/12=4/12\), and C’s is \(2/12\). The new ratio is \(6:4:2\), which simplifies to \(3:2:1\). Exam tip: Always verify that the new shares add up to the whole profit. The unchanged ratio in option D ignores the sacrifice made by A and B.

Related tags

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

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