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After the retirement or death of a partner, the new profit-sharing ratio of the two remaining partners is 3:2. What will be their respective shares in the total profit?

Answer and explanation

Correct answer: 3/5 and 2/5

The total parts in the new ratio are 3 + 2 = 5. Therefore, the first partner’s share is 3/5 and the second partner’s share is 2/5. Option B is incorrect because writing the ratio directly as 3/2 and 2/3 does not express the shares as fractions of the whole. Exam tip: Add the terms of the ratio and divide each term by their sum.

Related tags

New RatioProfit Sharing RatioRetirement Of PartnerDeath Of PartnerPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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