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A, B and C share profits in the ratio 5:3:2. After C retires, the new profit-sharing ratio becomes 7:3. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:0

Under the old ratio, A’s share was 5/10 = 1/2 and B’s share was 3/10. Under the new ratio, A receives 7/10 and B continues to receive 3/10. Thus, A’s gain is 7/10 − 1/2 = 1/5, while B’s gain is 3/10 − 3/10 = 0. Therefore, the gaining ratio is 1/5:0 = 1:0. Exam tip: Calculate each continuing partner’s gain by subtracting the old share from the new share.

Related tags

Gaining RatioPartner RetirementNew Profit Sharing RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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