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A, B and C share profits in the ratio 4:9:7. On C’s retirement, the new profit-sharing ratio of A and B becomes 3:5. What will be the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:1

Under the old ratio, A’s share was \(4/20=8/40\) and B’s share was \(9/20=18/40\). Under the new ratio of 3:5, A’s share is \(3/8=15/40\) and B’s share is \(5/8=25/40\). Thus, A gains \(15/40-8/40=7/40\), while B gains \(25/40-18/40=7/40\). Since both partners gain equally, the gaining ratio is 1:1. Exam tip: Calculate each partner’s gain as new share minus old share, then simplify the ratio.

Related tags

Gaining RatioPartner RetirementNew Profit Sharing RatioPartnership AccountsAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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