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A and B’s old profit-sharing ratio is 3:2 and their new profit-sharing ratio is 4:3. What is B’s gain?

Answer and explanation

Correct answer: 1/35

B’s old share is 2/5 and the new share is 3/7. Therefore, B’s gain = new share − old share = 3/7 − 2/5 = (15−14)/35 = 1/35. Hence, option A is correct. 1/7 is merely the difference between the numerators and is not the correct gain. In exams, calculate gain by subtracting the old share from the new share.

Related tags

Partnership AccountsGoodwillGaining RatioProfit Sharing RatioAdmission Of PartnerPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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