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A, B and C share profits in the ratio 2:5:3. C retires, and A and B adopt a new ratio of 3:7. What is their gaining ratio?

Answer and explanation

Correct answer: 1:2

The governing concept is gaining ratio, which is calculated by comparing each continuing partner’s new share with the old share. The original total is 10, so A’s old share is 2/10 and B’s old share is 5/10. Their new ratio 3:7 has a total of 10, giving A a new share of 3/10 and B a new share of 7/10. A’s gain is 3/10−2/10=1/10, and B’s gain is 7/10−5/10=2/10. Therefore their gains are 1/10:2/10, which simplifies to 1:2. Option B is the new profit-sharing ratio, not the gain in shares; options C and D are respectively the old ratio and an unsupported equal division.

Related tags

Gaining RatioRetirementNew RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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