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A, B and C share profits in the ratio 3:3:4. When C retires, A and B agree to share future profits in the new ratio 5:5. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:1

A’s old share was \(3/10\), and the new share is \(5/10\); therefore, A gains \(2/10\). Similarly, B also gains \(2/10\), since its share rises from \(3/10\) to \(5/10\). Hence, the gaining ratio is \(2/10:2/10=1:1\). Exam tip: calculate each continuing partner’s gain as new share minus old share; do not treat the new ratio itself as the gaining ratio.

Related tags

Partnership AccountsGaining RatioRetirement Of PartnerNew RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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