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A, B, C and D share profits in the ratio 3:2:2:1. D retires, and A, B and C continue to share profits among themselves in their old ratio. What will be the new profit-sharing ratio of A, B and C?

Answer and explanation

Correct answer: 3:2:2

D’s retirement removes only D’s share from the partnership. Since A, B and C agree to continue sharing profits in their old ratio, their new ratio remains 3:2:2. In option B, C’s share has been incorrectly reduced to 1. Exam tip: when the continuing partners retain their old ratio, write the old ratio of only those continuing partners.

Related tags

Partner RetirementNew RatioProfit Sharing RatioReconstitutionContinuing PartnersNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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