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A, B and C share profits in the ratio 5:4:1. When C retires, the new profit-sharing ratio of A and B becomes 2:3. What is B’s gaining share?

Answer and explanation

Correct answer: 1/5

B’s old share was \(4/10\). Under the new ratio 2:3, B’s share is \(3/5=6/10\). Therefore, B’s gaining share = new share − old share = \(6/10-4/10=2/10=1/5\). The value \(1/10\) is C’s old share, not B’s gain. Exam tip: calculate a partner’s gaining share by subtracting the old share from the new share.

Related tags

Gaining ShareRetirement Of PartnerNew RatioPartnership AccountingNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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