Question

A and B share profits and losses in the ratio of 3:1. C is admitted into partnership for 1/4 share. The sacrificing ratio of A and B is ________________.

• A. Equal
• B. 3:1
• C. 2:1
• D. 3:2

Answer 1

Answer: (B)

3:1

Calculation of new profit sharing ratio:

Let total profit = 1

C' share = 1/4

Remaining share = 1 - 1/4 = 3/4

A' new share = 3/4 of 3/4 = 9/16

B's new share = 1/4 of 3/4 = 3/16

C's share = 1/4 = 4/16

Th new profit sharing ratio of A, B and C is:

= 9:3:4

A's sacrifice = 3/4 - 9/16 = (12-9)/16 = 3/16

B's sacrifice = 1/4 - 3/16 = (4-3)/16 = 1/16

Sacrificing ratio of A and B = 3:1

Sacrificing ratio of the existing partners is same as their existing ratio.