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A B C share profits in 2:2:5. C retires and A B's new ratio is 5:4. What is A's gain?

Answer and explanation

Correct answer: One third

The direct answer is A, one third. The old ratio is A:B:C = 2:2:5, so the total is 9 parts. A’s old share is therefore 2/9. After C retires, A and B share in the new ratio 5:4, whose total is 9 parts. A’s new share is 5/9. A’s gain is new share minus old share: 5/9 - 2/9 = 3/9 = 1/3. Option A is correct because it gives this simplified gain. Option B, 3/9, represents the same value numerically, but it is not in the simplest form; because the question offers one third, A is the expected answer. Option C, 4/9, is B’s new share, not A’s gain. Option D, 5/9, is A’s new share, not the increase in A’s share. The essential lesson is that a new ratio alone is not the gain; gain is the difference between new and old shares. Exam cue: always convert both shares to fractions of the whole before subtracting.

Related tags

Goodwill-SettlementGaining-RatioNumerical

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