gain in profit sharing ratio
loss in profit sharing ratio
no change in profit sharing ratio
none of the above
Answer is Right!
Answer is Wrong!
The correct answer is: C. no change in profit sharing ratio.
When a partner retires, the remaining partners’ profit sharing ratio is not affected. This is because the retiring partner’s share of the profits is simply distributed among the remaining partners. For example, if a partnership has three partners with equal profit sharing ratios of 1/3, and one partner retires, the remaining two partners will each have a profit sharing ratio of 2/3.
Here is a brief explanation of each option:
- Option A: gain in profit sharing ratio. This is not correct because the remaining partners’ profit sharing ratio is not affected by the retirement of a partner.
- Option B: loss in profit sharing ratio. This is not correct because the remaining partners’ profit sharing ratio is not affected by the retirement of a partner.
- Option C: no change in profit sharing ratio. This is the correct answer because the remaining partners’ profit sharing ratio is not affected by the retirement of a partner.
- Option D: none of the above. This is not correct because option C is the correct answer.