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A, B and C share profits in the ratio 3:4:3. C retires, and A and B acquire C’s share in the ratio 1:2. What will be the new profit-sharing ratio of A and B?

Answer and explanation

Correct answer: 2:3

C’s original share is \(3/10\). Since A and B acquire it in the ratio 1:2, A receives \(1/10\) and B receives \(2/10\). A’s new share is \(3/10+1/10=4/10\), while B’s new share is \(4/10+2/10=6/10\). Therefore, the new ratio is \(4:6=2:3\). Remember that 1:2 is the ratio in which the retiring partner’s share is acquired, not the new profit-sharing ratio.

Related tags

New RatioRetirement Of PartnerGaining RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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