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A, B and C share profits in the ratio 6:2:5. When B retires, what will be the new profit-sharing ratio of A and C if no new agreement is made?

Answer and explanation

Correct answer: 6:5

In the absence of a new agreement, the retiring partner’s share is acquired by the continuing partners in their old ratio. After removing B, A and C retain their old shares of 6 and 5 respectively, so their new ratio is 6:5. Exam tip: remove only the retiring partner’s share and compare the remaining partners’ original shares.

Related tags

Partner RetirementNew Profit Sharing RatioPartnership AccountsContinuing PartnersNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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