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A, B and C share profits in the ratio 3:2:5. C retires, and the new profit-sharing ratio of A and B is fixed at 2:3. Which statement is correct regarding the change?

Answer and explanation

Correct answer: B gained more share than A

C’s old share is 5/10, which is gained by A and B after C’s retirement. A’s old share was 3/10 and his new share is 2/5 = 4/10, so A gained 1/10. B’s old share was 2/10 and his new share is 3/5 = 6/10, so B gained 4/10. Therefore, B gained more than A. Exam tip: Calculate each continuing partner’s gain as new share minus old share.

Related tags

Compare GainsRetirement Of PartnerNew RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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