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A, B and C share profits in the ratio 4:3:5. B dies, and A and C acquire B’s share in the ratio 1:2. What will be the new profit-sharing ratio of A and C?

Answer and explanation

Correct answer: 5:7

B’s original share is 3 parts. A and C acquire this share in the ratio 1:2, so A receives 1 part and C receives 2 parts. Therefore, A’s new share is 4+1=5 and C’s new share is 5+2=7. Hence, the new ratio is 5:7. The ratio 1:2 represents only the manner of acquiring B’s share, not the new overall ratio. Exam tip: Add each continuing partner’s acquired share to their original share after removing the retiring or deceased partner.

Related tags

Death Of PartnerNew RatioProfit Sharing RatioPartnership ReconstitutionAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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