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A, B and C share profits in the ratio 2:5:3. A dies. If B and C continue to share profits between themselves in their old ratio, what will be their new profit-sharing ratio?

Answer and explanation

Correct answer: 5:3

After A’s death, only B and C will share the profit. Their respective shares in the original ratio were 5 and 3, so their old mutual ratio was 5:3. Therefore, their new profit-sharing ratio is 5:3. Exam tip: When a partner leaves, use the remaining partners’ old mutual ratio unless the question specifies a change.

Related tags

Death Of PartnerNew RatioProfit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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