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A, B and C share profits in the ratio 5:5:4. After C retires, A and B decide to share profits in the new ratio 3:4. What will be the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:3

Under the old ratio 5:5:4, A, B and C had shares of 5/14, 5/14 and 4/14 respectively. Under the new ratio 3:4, A and B receive 6/14 and 8/14. Therefore, A gains 6/14 − 5/14 = 1/14, while B gains 8/14 − 5/14 = 3/14. Hence, their gaining ratio is 1:3. In the exam, calculate each partner’s gain as new share minus old share before forming the ratio.

Related tags

Gaining RatioPartner RetirementNew Profit Sharing RatioAccountancyClass 12New RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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