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A and B share profits in the ratio 9:6. Their new profit-sharing ratio is 4:3. Who gains from this change?

Answer and explanation

Correct answer: A

The old ratio 9:6 simplifies to 3:2. Therefore, A’s old share is \(3/5\), while the new share is \(4/7\). Since \(4/7 < 3/5\), A’s share decreases and A sacrifices. B’s share increases from \(2/5\) to \(3/7\), so A gains. In the exam, compare each partner’s old and new shares to identify the gaining or sacrificing partner.

Related tags

GoodwillChange In RatioGain RatioPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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