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A, B and C share profits in the ratio 6:2:2. C retires, and the new profit-sharing ratio of A and B is fixed at 4:1. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:0

Under the old ratio 6:2:2, A’s share was 6/10 = 3/5 and B’s share was 2/10 = 1/5. Under the new ratio 4:1, A receives 4/5 and B receives 1/5. Therefore, A’s gain is 4/5 − 3/5 = 1/5, while B’s gain is 1/5 − 1/5 = 0. Hence, the gaining ratio of A and B is 1:0. Exam tip: Calculate each partner’s gain by subtracting the old share from the new share.

Related tags

Gaining RatioPartner RetirementNew RatioProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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