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

Answer and explanation

Correct answer: 1:0

Under the old ratio 4:4:2, A and B have shares of 4/10 and 4/10. Under the new ratio 3:2, their shares become 3/5 = 6/10 and 2/5 = 4/10. Thus, A gains 6/10 − 4/10 = 2/10 = 1/5, while B gains nothing. Therefore, the gaining ratio is 1:0. Exam tip: Calculate each partner’s gain by subtracting the old share from the new share.

Related tags

Gaining RatioPartner RetirementNew Profit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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