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A, B and C share profits in the ratio 4:3:3. A dies. In the absence of a new agreement, in what ratio will B and C share the profits?

Answer and explanation

Correct answer: 1:1

After A’s death, B and C are the continuing partners. Their former profit-sharing ratio was 3:3, which simplifies to 1:1; therefore, they will share future profits equally. The ratio 4:3 is not the ratio between B and C because it includes A’s original share. Exam tip: Remove the deceased partner’s share and simplify the old ratio of the continuing partners.

Related tags

Partnership AccountsDeath Of PartnerNew Profit Sharing RatioContinuing PartnersOld RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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