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A, B, C and D share profits in the ratio 1:2:3:4. D retires, and A, B and C acquire D’s share equally. What will be A’s new profit-sharing ratio?

Answer and explanation

Correct answer: 7/30

The total ratio is 10, so D’s old share is 4/10. Since D’s share is acquired equally by A, B and C, each receives 4/30. A’s old share was 1/10 = 3/30. Therefore, A’s new share is 3/30 + 4/30 = 7/30. Exam tip: first convert the old ratio into fractional shares, then add the acquired share.

Related tags

Partnership ReconstitutionRetirement Of PartnerNew Profit Sharing RatioEqual AcquisitionNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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