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

Answer and explanation

Correct answer: 1/10

A’s old profit share was \(3/(3+5+2)=3/10\). After C’s retirement, A’s new share is \(2/(2+3)=2/5=4/10\). Therefore, A’s gaining share = new share − old share = \(4/10-3/10=1/10\). Option B is A’s new share, not the gain. Exam tip: Always calculate gaining share by subtracting the old share from the new share.

Related tags

Gaining ShareNew RatioRetirement Of PartnerProfit Sharing RatioPartnership AccountingNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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