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A, B and C share profits in the ratio 5:1:4. C retires, and A and B acquire C's share equally. What will be the new ratio of A and B?

Answer and explanation

Correct answer: 7:3

First find the retiring partner's share and then distribute it according to the stated gaining ratio. The old ratio totals 5 + 1 + 4 = 10, so C's share is 4/10. Equal acquisition means A and B each receive 2/10. A's new share becomes 5/10 + 2/10 = 7/10, and B's new share becomes 1/10 + 2/10 = 3/10. Removing the common denominator gives the new ratio 7:3. Option B is only the old ratio and does not include C's share; option C gives the acquisition ratio rather than final shares; option D results from an incorrect addition. Therefore option A is the correct new ratio.

Related tags

New RatioEqual AcquisitionRetirementNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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