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A, B and C share profits in the ratio 5:3:2. After C retires, the new profit-sharing ratio of A and B becomes 7:3. What will be A’s new share of profit?

Answer and explanation

Correct answer: 7/10

After C’s retirement, A and B share profits in the new ratio 7:3. The total of the ratio is 7 + 3 = 10, so A’s new share is 7/10. The option 5/10 may relate to the old ratio, but the question asks for the share according to the new ratio. Exam tip: To find a partner’s share from a ratio, divide that partner’s ratio by the total of all ratio parts.

Related tags

New RatioPartner RetirementProfit Sharing RatioPartner ShareReconstitution Of PartnershipNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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