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A, B and C share profits in the ratio 4:3:2. C retires, and A takes over C’s entire share. What will be the new profit-sharing ratio of A and B?

Answer and explanation

Correct answer: 2:1

A’s old share was 4 parts and C’s share was 2 parts. When A takes over C’s entire share, A’s new share becomes 4 + 2 = 6 parts, while B’s share remains 3 parts. Thus, the new ratio is 6:3, or 2:1 in its simplest form. Exam tip: Add the retiring partner’s share to the old share of the partner who takes it over.

Related tags

Retirement Of PartnerNew Profit Sharing RatioGaining PartnerAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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