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A, B and C share profits in the ratio 5:5:4. After C retires, the new profit-sharing ratio of A and B is 3:4. Whose share among A and B has decreased?

Answer and explanation

Correct answer: Neither A nor B

A’s old share was 5/14, while the new share is 3/7 = 6/14, so A’s share increased. B’s old share was 5/14, while the new share is 4/7 = 8/14, so B’s share also increased. Therefore, neither A nor B has suffered a decrease; the outgoing partner C’s share has ceased. Exam tip: express the old and new shares with a common denominator before comparing them.

Related tags

New RatioRetirement Of PartnerShare ComparisonProfit Sharing RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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