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A, B and C share profits in the ratio 6:2:2. C retires, and the new profit-sharing ratio of A and B becomes 7:3. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:1

Before C’s retirement, A’s share was 6/10 and B’s share was 2/10. Under the new ratio, A’s share becomes 7/10 and B’s share becomes 3/10. Thus, A’s gain is 7/10 − 6/10 = 1/10, while B’s gain is 3/10 − 2/10 = 1/10. Since both partners gain equally, the gaining ratio is 1:1. Remember that 7:3 is the new ratio, not the gaining ratio; the gaining ratio is calculated from the increase in each partner’s share.

Related tags

Gaining RatioPartner RetirementNew RatioProfit Sharing RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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