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A and B have an old profit-sharing ratio of 3:2. After C’s death, their new profit-sharing ratio becomes 7:5. What is B’s gaining share?

Answer and explanation

Correct answer: \(\frac{1}{60}\)

B’s old share is \(\frac{2}{3+2}=\frac{2}{5}\), while B’s new share is \(\frac{5}{7+5}=\frac{5}{12}\). Therefore, gaining share = new share − old share = \(\frac{5}{12}-\frac{2}{5}=\frac{25-24}{60}=\frac{1}{60}\). Hence, option A is correct. Exam tip: For a gaining ratio, subtract the old share from the new share; reversing the order gives an incorrect result.

Related tags

Partnership AccountsRetirement Of PartnerDeath Of PartnerGaining RatioNew Profit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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