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A, B and C share profits in the ratio 3:8:4. When A retires, B and C acquire A’s share in the ratio 2:1. What will be the new profit-sharing ratio in its simplest form?

Answer and explanation

Correct answer: 2:1

A’s original share is 3 parts. B and C acquire this share in the ratio 2:1, so B receives 2 parts and C receives 1 part. Thus, B’s new share is 8+2=10 and C’s new share is 4+1=5. The new ratio is therefore 10:5, which reduces to 2:1. The option 5:2 is incorrect because it does not correctly add the acquired portions to B’s and C’s original shares. Exam tip: calculate each partner’s gain first, add it to the old share, and then simplify the resulting ratio.

Related tags

Retirement Of PartnerNew Profit Sharing RatioPartner Acquisition RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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