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A, B and C share profits in the ratio 6:5:4. After C retires, the new profit-sharing ratio of A and B becomes 1:2. Which partner's share of profit has decreased?

Answer and explanation

Correct answer: A

The old total ratio is 6+5+4=15. Therefore, A's old share was \(6/15=2/5\), while A's new share after C's retirement is \(1/(1+2)=1/3=5/15\). Since \(5/15<6/15\), A's share has decreased. In contrast, B's share has increased from \(5/15\) to \(2/3=10/15\). Exam tip: Convert the old and new shares to a common denominator before comparing them.

Related tags

New RatioRetirement Of PartnerShare DecreaseProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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