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A, B, C and D share profits in the ratio 4:3:2:1. D retires, and A, B and C continue to share profits in their old mutual ratio. What will be the new profit-sharing ratio of A, B and C?

Answer and explanation

Correct answer: 4:3:2

After D’s retirement, the old mutual ratio of A, B and C remains 4:3:2. Therefore, their new ratio is 4:3:2. D’s 1/10 share is not redistributed among them because the question states that they continue in their old mutual ratio. Exam tip: When continuing partners share profits in their old mutual ratio, simply omit the retiring partner’s term from the original ratio.

Related tags

Partnership AccountsPartner RetirementNew RatioProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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