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A, B and C share profits in the ratio 8:3:1. When A retires, B and C acquire A’s share in the ratio 3:5. What will be the new profit-sharing ratio of B and C?

Answer and explanation

Correct answer: 1:1

In the original ratio, A has 8 parts, which B and C acquire in the ratio 3:5. Thus, B receives 3 parts and C receives 5 parts. The new ratio of B:C is (3+3):(1+5) = 6:6 = 1:1. The ratio 3:5 is only the gain ratio for acquiring A’s share, not the new profit-sharing ratio. Exam tip: Add each continuing partner’s acquired share to their original share to find the new ratio.

Related tags

Retirement Of PartnerNew RatioGain RatioProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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