The deed gives profit sharing ratio as three to two but one partner remained inactive throughout the year. How will profit be shared?

Correct answer: Still in three to two ratio

A partnership deed is the main agreement that tells partners how profit or loss will be shared. When the deed clearly states a ratio of three to two, that ratio remains applicable unless the partners formally agree to change it. A partner’s being inactive does not, by itself, cancel that partner’s right to receive the agreed share. Partnership rights arise from the agreement, not simply from the amount of work done during a particular year.

Therefore, the correct choice is B: profit is still shared in the ratio of three to two. The total profit is divided into five equal parts; the first partner receives three parts and the second receives two parts. Giving the entire profit to the active partner would ignore the deed. Equal sharing or sharing according to capital would apply only if an applicable agreement or legal rule required it. The supplied answer is consistent and clearly supported.