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A, B and C share profits in the ratio 7:6:5. After C retires, the new profit-sharing ratio of A and B becomes 5:4. What is A’s gaining share?

Answer and explanation

Correct answer: \(\frac{1}{6}\)

A’s old profit share is \(\frac{7}{7+6+5}=\frac{7}{18}\). After C’s retirement, A’s new share is \(\frac{5}{5+4}=\frac{5}{9}=\frac{10}{18}\). Therefore, A’s gaining share is \(\frac{10}{18}-\frac{7}{18}=\frac{3}{18}=\frac{1}{6}\). Exam tip: Gaining share is calculated as new share minus old share.

Related tags

Gaining ShareNew Profit Sharing RatioRetirement Of PartnerPartnership AccountingNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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