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A, B and C share profits in the ratio 5:3:2. C retires. What is C’s old profit-sharing share?

Answer and explanation

Correct answer: 1/5

To find a partner’s share from a stated ratio, divide that partner’s ratio part by the sum of all ratio parts. The total of 5:3:2 is 5 + 3 + 2 = 10. C has 2 parts, so C’s share is 2/10. Reducing this fraction by dividing numerator and denominator by 2 gives 1/5. Therefore option A is correct. Option B is B’s share, because B has 3/10. Option D, 5/10, represents A’s share before simplification, not C’s share, while option C is unrelated to the given ratio. Retirement does not change the calculation of C’s old share; it only creates the need to settle that share and related goodwill.

Related tags

AccountancyOld RatioRetirementProfit SharingDeceased Partner’s ShareDeceased Partner S ShareReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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