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A, B and C share profits in the ratio 7:1:2. After C retires, the new profit-sharing ratio of A and B is 3:2. Which partner's share of profit has decreased?

Answer and explanation

Correct answer: A

Before C's retirement, A's share was 7/10 and B's share was 1/10. Under the new ratio of 3:2, A's share becomes 3/5, or 6/10, while B's share becomes 2/5, or 4/10. Thus, A's share decreases from 7/10 to 6/10, whereas B's share increases. Exam tip: Convert the old and new ratios into fractions with a common denominator before comparing them.

Related tags

New RatioRetirement Of PartnerShare DecreaseProfit Sharing RatioAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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