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A, B and C share profits in the ratio 2:2:5. When C retires, the new profit-sharing ratio of A and B becomes 5:4. What is B’s gain in share?

Answer and explanation

Correct answer: 2/9

B’s old share was 2/(2+2+5) = 2/9. After C’s retirement, A and B share profits in the new ratio 5:4, so B’s new share is 4/9. Therefore, B’s gain = new share − old share = 4/9 − 2/9 = 2/9. In such questions, subtract the old share from the new share; 4/9 is B’s new share, not his gain.

Related tags

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

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