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

Answer and explanation

Correct answer: 3:5

The old ratio is A:B:C = 3:3:2. Since B takes C’s entire share of 2, A’s share remains 3 while B’s share becomes 3 + 2 = 5. Therefore, the new ratio of A and B is 3:5. Exam tip: When one partner takes the whole share of the retiring partner, add the acquired share to that partner’s original share.

Related tags

Retirement Of PartnerNew RatioProfit Sharing RatioGaining PartnerAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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