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A and B share profits in the old ratio of 5:3. Their new profit-sharing ratio becomes 3:3. Which partner gains from this change?

Answer and explanation

Correct answer: B

Under the old ratio, A's share was 5/8 and B's share was 3/8. Under the new ratio of 3:3, each partner's share becomes 1/2. Therefore, A's share decreases from 5/8 to 1/2, while B's share increases from 3/8 to 1/2. Hence, B is the gaining partner. Exam tip: Compare each partner's old and new shares to identify the gaining or sacrificing partner.

Related tags

GoodwillChange-In-RatioGaining-PartnerPartnership-AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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