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A, B and C share profits in the ratio 4:6:5. C retires, and A and B adopt a new ratio of 2:5. Whose share has decreased?

Answer and explanation

Correct answer: Neither

The correct method is to compare each continuing partner’s old share with the new share. The old total is 4+6+5=15, so A’s old share is 4/15 and B’s old share is 6/15=2/5. The new ratio 2:5 has total 7, so A’s new share is 2/7 and B’s new share is 5/7. For A, 2/7−4/15=(30−28)/105=2/105, which is an increase. For B, 5/7−6/15=5/7−2/5=(25−14)/35=11/35, also an increase. Therefore neither partner’s share has decreased, so option D is correct. Option A is a tempting error caused by comparing numerators without equal denominators.

Related tags

Share ComparisonRetirementNew RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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