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A and B share profits in 5:3. C receives a 1/5 share, and the new ratio is 7:5:4. What will be the sacrificing ratio?

Answer and explanation

Correct answer: 3:1

The correct answer is A. Sacrifice equals an old partner’s old share minus the partner’s new share. Before admission, A’s share is 5/8 and B’s share is 3/8. The new ratio 7:5:4 has total 16 parts, so A’s new share is 7/16 and B’s new share is 5/16. A sacrifices 5/8 − 7/16 = 10/16 − 7/16 = 3/16. B sacrifices 3/8 − 5/16 = 6/16 − 5/16 = 1/16. Thus the sacrificing ratio is 3/16:1/16 = 3:1. B reverses the ratio; C is the old ratio; D is part of the new ratio, not the sacrifice. Always subtract new share from old share.

Related tags

Sacrificing RatioAdmission Of PartnerNew RatioPartnership AccountingNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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