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The old profit-sharing ratio of A, B and C is 4:3:2. When C retires, the new profit-sharing ratio of A and B becomes 5:4. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:1

Under the old ratio, A’s share was \(\frac{4}{9}\) and B’s share was \(\frac{3}{9}\). Under the new ratio of 5:4, A’s share becomes \(\frac{5}{9}\) and B’s share becomes \(\frac{4}{9}\). Thus, both A and B gain \(\frac{1}{9}\), so the gaining ratio is \(\frac{1}{9}:\frac{1}{9}=1:1\). In an exam, first convert both ratios into individual fractions and then compare the increase in each partner’s share.

Related tags

Goodwill SettlementGaining RatioPartner RetirementProfit Sharing RatioReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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