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A, B and C share profits in the ratio 8:1:1. C retires, and the new profit-sharing ratio of A and B becomes 9:1. Which of the following statements is correct?

Answer and explanation

Correct answer: Only A gained a share

Under the old ratio, A’s share was 8/10 and B’s share was 1/10. Under the new ratio, A’s share becomes 9/10 while B’s share remains 1/10. Therefore, A gained 1/10 and B’s share remained unchanged; hence, only A gained a share. Exam tip: Gain = New Share − Old Share.

Related tags

Retirement Of PartnerGain RatioNew Profit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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