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A, B and C share profits in the ratio 4:7:4. B retires, and the new profit-sharing ratio of A and C becomes 3:2. What is the gaining ratio of A and C?

Answer and explanation

Correct answer: 5:2

Under the old ratio, A and C each had a share of 4/15. Under the new ratio of 3:2, A’s share is 3/5 = 9/15 and C’s share is 2/5 = 6/15. Therefore, A’s gain is 9/15 − 4/15 = 5/15, while C’s gain is 6/15 − 4/15 = 2/15. Hence, the gaining ratio is 5:2. Exam tip: Gaining share = new share − 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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