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A, B and C share profits in the ratio 3:6:1. C retires, and A takes over C’s entire share. What is the simplified new profit-sharing ratio of A and B?

Answer and explanation

Correct answer: 2:3

C’s share is 1/10. Since A takes over C’s entire share, A’s new share becomes 3/10 + 1/10 = 4/10, while B’s share remains 6/10. Thus, the new ratio is 4:6, which simplifies to 2:3. Exam tip: First add the retiring partner’s share to the gaining partner’s old share, and then reduce the resulting ratio to its simplest form.

Related tags

Partner RetirementNew Profit Sharing RatioGaining RatioRatio SimplificationAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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