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A, B and C share profits in the ratio 12:8:5. A dies. If B and C continue to share profits between themselves in their old ratio, what will be their new profit-sharing ratio?

Answer and explanation

Correct answer: 8:5

After A’s death, only B and C remain as partners. Their respective old profit shares were 8 and 5, so their new ratio remains 8:5. The ratio 3:2 is not a simplified form of 8:5 because 8 and 5 have no common divisor. Exam tip: When the remaining partners agree to continue in their old mutual ratio, that same ratio becomes their new profit-sharing ratio.

Related tags

Partnership AccountsRetirement Or DeathNew RatioProfit Sharing RatioRemaining PartnersNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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