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A, B and C share profits in the ratio 9:6:5. When B retires, if A and C continue to share the profit between themselves in their old ratio, what will be the new profit-sharing ratio of A and C?

Answer and explanation

Correct answer: 9:5

After B retires, only A and C will share the profit. Continuing in the old ratio means that the ratio between A and C remains based on their original shares, 9 and 5. Therefore, the new ratio A:C is 9:5. Choosing 6:5 would incorrectly retain the old ratio of B and C. Exam tip: Remove the retiring partner and identify the stated relationship between the remaining partners before forming the new ratio.

Related tags

Partnership AccountsPartner RetirementNew Profit Sharing RatioOld RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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