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A, B and C share profits and losses in the ratio 2:1:7. After C retires, the new ratio of A and B becomes 1:1. What is A's gain in share?

Answer and explanation

Correct answer: \(\frac{3}{10}\)

A's old share was \(\frac{2}{10}\). After C's retirement, the new ratio is 1:1, so A's new share is \(\frac{1}{2}=\frac{5}{10}\). Therefore, A's gain = new share − old share = \(\frac{5}{10}-\frac{2}{10}=\frac{3}{10}\). Option C represents only A's old share, not the gain. Exam tip: Calculate a partner's gain by subtracting the old share from the new share.

Related tags

Gain Of PartnerNew RatioRetirement Of PartnerProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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