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The profit-sharing ratio of three old partners is 5:3:2. A new partner is admitted for a 1/4 share of the profits. The new shares of the first and second old partners are 3/8 and 1/4, respectively. What will be the new profit-sharing share of the third old partner?

Answer and explanation

Correct answer: 1/8

The new profit shares of all partners must add up to 1. Therefore, the third partner’s share is 1 − 3/8 − 1/4 − 1/4 = 1/8. Thus, option A is correct. Exam tip: After admission, always verify that the sum of all partners’ new shares, including the incoming partner’s share, equals 1.

Related tags

Admission Of PartnerNew Profit Sharing RatioMissing ShareProfit Sharing RatioTotal Share CheckReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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