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A, B and C share profits in the ratio 4:1:5. C retires, and A acquires C’s entire share of profit. What will be the new profit-sharing ratio of A and B?

Answer and explanation

Correct answer: 9:1

The total of the original ratio 4:1:5 is 10. A’s original share is 4/10 and C’s share is 5/10. Since A acquires C’s entire share, A’s new share becomes 4/10 + 5/10 = 9/10, while B’s share remains 1/10. Therefore, the new ratio of A and B is 9:1. Exam tip: Add the retiring partner’s acquired share to the existing share of the gaining partner.

Related tags

New RatioPartner RetirementGaining RatioProfit Sharing RatioAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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