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A and B shared profits in the old ratio of 2:1. After C’s death, their new profit-sharing ratio became 5:3. By what fraction did B’s share increase?

Answer and explanation

Correct answer: 1/24

B’s old share was \(1/(2+1)=1/3\), while his new share is \(3/(5+3)=3/8\). Therefore, B’s gain is \(3/8-1/3=(9-8)/24=1/24\). The value 3/8 represents B’s new share, not the increase in his share. Exam tip: To calculate a partner’s gain, subtract the old share from the new share.

Related tags

Gained ShareNew RatioPartner DeathProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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