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A, B and C share profits in the ratio 4:1:5. C retires, and A and B adopt a new ratio of 7:3. What is their gaining ratio?

Answer and explanation

Correct answer: 3:2

The governing concept is the gaining ratio, which measures how much each continuing partner’s share increases after a partner retires. The old ratio has 10 parts, so A’s old share is 4/10 and B’s old share is 1/10. The new ratio gives A 7/10 and B 3/10. Therefore, A’s gain is 7/10 − 4/10 = 3/10, while B’s gain is 3/10 − 1/10 = 2/10. Removing the common denominator gives the gaining ratio A:B = 3:2, so option A is correct. The gains total 5/10, exactly equal to C’s former share. Option B is merely the new ratio, option C is the old ratio, and option D wrongly assumes equal gains.

Related tags

Gaining RatioRetirementNew RatioShare CalculationAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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