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A, B and C share profits in the ratio 5:3:2. B dies, and A and C decide to continue sharing profits in their old ratio. What will be the new profit-sharing ratio of A and C?

Answer and explanation

Correct answer: 5:2

After B’s death, only A and C remain. In the original ratio 5:3:2, A’s share was 5 and C’s share was 2. Since they continue in the same mutual ratio, their new ratio is 5:2. Exam tip: when the question states that the remaining partners continue in the old ratio, retain their original share numbers and omit the outgoing partner’s share.

Related tags

Partnership AccountsDeath Of PartnerNew RatioOld RatioReconstitutionNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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