In adjustment of capital during admission of a partner, certain steps are followed. Arrange them in a sequence:
(A) Calculation of new profit sharing ratio
(B) Calculate required capitals of old partners
(C) Calculate the cash to be brought in or withdrawn by old partners
(D) Calculate firm's capital
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (D), (B), (C)
When capitals are to be in the new profit sharing ratio, each step needs the figure produced by the step before it.
(A) Calculation of new profit sharing ratio — comes first, because every later figure depends on each partner’s new share.
(D) Calculate firm’s capital — comes next. The new partner’s capital divided by his share gives the capital of the whole firm (Rs. 20,000 for a 1/4 share means a firm’s capital of Rs. 80,000).
(B) Calculate required capitals of old partners — follows: the firm’s capital multiplied by each old partner’s new share.
(C) Calculate the cash to be brought in or withdrawn by old partners — comes last. It is the gap between the required capital and the actual capital after all adjustments: a shortfall is brought in, an excess is withdrawn.
NCERT (2026-27 edition):
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