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A, B and C share profits and losses in the ratio 4:4:2. C retires, and the new ratio of A and B is fixed at 6:6. What is the simplified new ratio of A and B?

Answer and explanation

Correct answer: 1:1

After C’s retirement, the given new ratio of A and B is 6:6. Dividing both terms by their greatest common divisor, 6, gives 6 ÷ 6 : 6 ÷ 6 = 1:1. Thus, A and B will share profits equally. Option 6:6 is the unsimplified ratio, while 2:1 changes the relative shares. In exams, express a ratio in the smallest whole numbers.

Related tags

Partnership AccountsNew RatioRetirement Of PartnerRatio SimplificationProfit SharingNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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