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A, B and C share profits in the ratio 2:3:5. A dies, and B and C agree to share future profits in the ratio 5:5. Which statement is correct?

Answer and explanation

Correct answer: B gained and C did not sacrifice

To analyse gain or sacrifice after a partner’s death, compare each continuing partner’s old share with the new share. The old ratio 2:3:5 has 10 parts, so B’s old share was 3/10 and C’s old share was 5/10. The new ratio 5:5 gives each continuing partner 5/10. B therefore gains 5/10 − 3/10 = 2/10. C’s share remains 5/10, so C neither gains nor sacrifices. Hence option A is the only correct statement. The distractor saying C sacrificed ignores that C’s new share equals the old share; the remaining options also incorrectly describe the unchanged share or deny B’s gain.

Related tags

Retirement Or DeathNew RatioGain And SacrificePartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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