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A, B and C share profits in the ratio 7:1:2. When C retires, the new profit-sharing ratio of A and B becomes 3:2. What will be the gaining ratio of A and B?

Answer and explanation

Correct answer: 0:1

Under the old ratio, A’s share was \(7/10\) and B’s share was \(1/10\). Under the new ratio 3:2, A’s share is \(3/5=6/10\) and B’s share is \(2/5=4/10\). Thus, A’s share decreases by \(1/10\), while B’s share increases by \(3/10\). Therefore, A gains nothing and B gains \(3/10\), giving a gaining ratio of \(0:3=0:1\). Exam tip: The gaining ratio includes only the increases in the shares of the continuing partners who actually gain.

Related tags

Gaining RatioRetirement Of PartnerNew RatioProfit Sharing RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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