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A, B, C and D share profits in the ratio 3:2:2:1. When D retires, the new profit-sharing ratio of A, B and C becomes 4:3:1. Which partner sacrifices?

Answer and explanation

Correct answer: C

Before retirement, C’s share was \(2/8\). Under the new ratio 4:3:1, C’s share becomes \(1/8\). Thus, C sacrifices \(2/8-1/8=1/8\). In contrast, A’s share increases from \(3/8\) to \(4/8\), and B’s from \(2/8\) to \(3/8\), so both gain. Exam tip: Sacrifice = old share − new share; a positive difference indicates the sacrificing partner.

Related tags

Goodwill-SettlementSacrificing-RatioRetirement-Of-PartnerPartnership-AccountsGoodwill SettlementReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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