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A, B, C and D share profits in the ratio 5:3:2:1. D retires, and A, B and C continue to share profits among themselves in their old ratio. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 5:3:2

After D retires, the ratio among A, B and C remains 5:3:2 because the question states that they continue in their old ratio. D’s share of 1/11 is effectively absorbed by the continuing partners in that same proportion, so the new ratio is 5:3:2. Exam tip: When the continuing partners retain their old mutual ratio, that old ratio becomes the new ratio after retirement.

Related tags

Partner RetirementNew RatioProfit Sharing RatioPartnership AccountsAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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