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A, B and C share profits in the ratio 3:7:5. C retires, and the new profit-sharing ratio of A and B becomes 5:3. Which partner makes a sacrifice on C’s retirement?

Answer and explanation

Correct answer: B

B’s old share was 7/15, whereas his new share is 3/8. Since 3/8 is less than 7/15, B’s share has decreased, so B makes the sacrifice. A’s share increases from 3/15 to 5/8, so A gains. In the examination, compare each partner’s old share with the new share to identify the sacrificing partner.

Related tags

Goodwill SettlementSacrificing RatioRetirement Of PartnerProfit Sharing RatioReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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