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A, B and C share profits in 8:5:3. B retires and A and C's new ratio is 3:2. What will be the gaining ratio?

Answer and explanation

Correct answer: 8:17

The gaining ratio compares the increases in the shares of the continuing partners, not their old or new profit-sharing ratios. The old shares are A=8/16=1/2 and C=3/16. Under the new ratio 3:2, A receives 3/5 and C receives 2/5. A’s gain is 3/5−1/2=6/10−5/10=1/10=8/80. C’s gain is 2/5−3/16=32/80−15/80=17/80. Therefore the gaining ratio A:C is 8:17, so option C is correct. Option A is the old ratio of A and C’s numerators, option B reverses or misstates the gains, and option D incorrectly assumes equal increases.

Related tags

Gaining RatioRetirementRatio CalculationGoodwill SettlementAccountancy Class 12Reconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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