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If partner B’s old profit-sharing ratio is \(5/16\) and the new profit-sharing ratio is \(7/16\), what will be B’s gaining ratio?

Answer and explanation

Correct answer: 1/8

Gaining ratio = New ratio − Old ratio. Therefore, B’s gaining ratio is \(7/16 - 5/16 = 2/16 = 1/8\). Options C and D are the old and new ratios respectively, not the gain. Exam tip: Always subtract the old ratio from the new ratio to find a partner’s gain.

Related tags

Gaining RatioPartner ReconstitutionProfit Sharing RatioFraction SimplificationAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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