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A, B and C share profits in the ratio 1:3:2. A dies, and B and C acquire A’s share equally. What will be the new ratio?

Answer and explanation

Correct answer: 7:5

The governing concept is redistribution of the deceased partner’s share among the surviving partners. The old ratio totals 1 + 3 + 2 = 6, so A’s share is 1/6. B and C acquire this share equally; each receives half of 1/6, which is 1/12. B’s new share is 3/6 + 1/12 = 6/12 + 1/12 = 7/12. C’s new share is 2/6 + 1/12 = 4/12 + 1/12 = 5/12. Thus, the new ratio of B and C is 7:5, so option A is correct. Option B merely repeats their old ratio. Options C and D fail to add one-half of A’s share to each surviving partner and therefore do not preserve the whole profit share.

Related tags

Death Of PartnerEqual AcquisitionNew RatioAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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