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The old profit-sharing ratio is 7:3. A new partner acquires a 1/5 share entirely from the second partner. What will be the sacrificing ratio of the old partners?

Answer and explanation

Correct answer: 0:1

The sacrificing ratio is the ratio of the shares surrendered by the old partners. Here, the new partner obtains the entire 1/5 share from the second partner; therefore, the first partner sacrifices nothing while the second partner sacrifices 1/5. Hence, the sacrificing ratio is 0:1. Exam tip: If the entire new partner’s share is taken from one old partner, the sacrificing ratio is 0:1 or 1:0 accordingly.

Related tags

Sacrificing RatioAdmission Of PartnerOld PartnersPartnership AccountsNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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