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A and B share profits in the old ratio of \(3:2\). After reconstitution, their new profit-sharing ratio becomes \(4:1\). What will be the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:0

Under the old ratio \(3:2\), A’s share was \(3/5\) and B’s share was \(2/5\). Under the new ratio \(4:1\), their shares become \(4/5\) and \(1/5\), respectively. Thus, A gains \(4/5-3/5=1/5\), while B’s share decreases and B does not gain. Therefore, the gaining ratio of A and B is \(1:0\). Exam tip: a partner whose new share exceeds the old share is a gaining partner.

Related tags

Gaining RatioPartnership ReconstitutionNew Profit Sharing RatioRetirement Of PartnerAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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