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Question -

Why i is it necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?



Answer -

When new partner/s is/are admitted, then the old partners in the partnership firm need to sacrifice their share of profit in favour of the new partner/s. This reduces the share of profit of the old partners ,hence, it is necessary to ascertain the new profit sharing ratio even for the old partners in the event of admission of new partner/s.

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