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A, B and C share profits in the ratio 5:4:1. When C retires, the new profit-sharing ratio becomes 3:2. What is A’s gaining ratio?

Answer and explanation

Correct answer: 1/10

A’s old share was 5/(5+4+1) = 5/10. Under the new ratio 3:2, A’s share is 3/5 = 6/10. Therefore, A’s gaining ratio = new share − old share = 6/10 − 5/10 = 1/10. The option 1/5 results from an incorrect calculation of the change in share. Exam tip: Gaining ratio is calculated as new share minus old share.

Related tags

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

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