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After a partner’s retirement, the new profit-sharing ratio of the two remaining partners is 7:3. What will be their respective shares in the profit?

Answer and explanation

Correct answer: 7/10 and 3/10

The sum of the terms in the new ratio 7:3 is 10. Therefore, the first partner’s share is 7/10 and the second partner’s share is 3/10. Option B incorrectly uses reciprocal-like values instead of dividing each ratio term by the total. Exam tip: Convert a ratio into shares by dividing each term by the sum of all ratio terms.

Related tags

New RatioProfit Sharing RatioPartner RetirementAccountancy BasicsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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