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

Answer and explanation

Correct answer: 11:9

A’s original share was 1/10 of the profits. When this share is divided equally, B and C each receive an additional 1/20. Thus, B’s new share is 5/10 + 1/20 = 11/20, while C’s new share is 4/10 + 1/20 = 9/20. Therefore, the new ratio is 11:9. Option 5:4 is only the old ratio of B and C. Exam tip: When the retiring or deceased partner’s share is acquired equally, add half of that share to each acquiring partner’s original share.

Related tags

AccountancyPartner DeathNew RatioProfit SharingEqual AcquisitionNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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