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A, B and C share profits in the ratio 6:4:5. C retires, and the new profit-sharing ratio of A and B becomes 5:4. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 7:8

The old ratio is 6:4:5, so A, B and C had old shares of 18/45, 12/45 and 15/45 respectively. In the new ratio 5:4, A and B receive 25/45 and 20/45 respectively. Therefore, A’s gain is 25/45 − 18/45 = 7/45, while B’s gain is 20/45 − 12/45 = 8/45. Hence, the gaining ratio is 7:8. Remember that gaining ratio is calculated as new share minus old share.

Related tags

Gaining RatioRetirement Of PartnerNew Profit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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