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A, B and C share profits in the ratio 6:6:3. A dies, and no new agreement is made regarding the sharing of profits thereafter. What will be the simplified new profit-sharing ratio of B and C?

Answer and explanation

Correct answer: 2:1

In the absence of a new agreement, the continuing partners, B and C, share profits in their old relative ratio. Thus, their ratio is 6:3. Dividing both terms by their highest common factor, 3, gives the simplified ratio 2:1. Option B is the same ratio in unsimplified form. Exam tip: Always reduce a ratio to its lowest terms when the question asks for the simplified ratio.

Related tags

Partnership AccountsPartner RetirementPartner DeathNew RatioRatio SimplificationNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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