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A, B and C share profits in the ratio 3:5:2. After B retires, the new profit-sharing ratio of A and C becomes 7:3. What is A’s gaining share?

Answer and explanation

Correct answer: 2/5

The total of the old ratio 3:5:2 is 10, so A’s old share was 3/10. After B’s retirement, A’s new share is 7/10. Therefore, A’s gaining share = new share − old share = 7/10 − 3/10 = 4/10 = 2/5. The value 7/10 is A’s new share, not the gaining share. Exam tip: Always calculate the gaining share by subtracting the old share from the new share.

Related tags

Retirement Of PartnerGaining RatioNew Profit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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