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A, B and C share profits in the ratio 5:8:2. B retires, and the new profit-sharing ratio of A and C is fixed at 4:1. What is A’s gaining share?

Answer and explanation

Correct answer: 7/15

A’s old share was \(5/(5+8+2)=5/15\). After B’s retirement, A’s new share is \(4/(4+1)=4/5=12/15\). Therefore, A’s gaining share = new share − old share = \(12/15-5/15=7/15\). Option B represents A’s new share, not the gain. Exam tip: Always calculate gaining share as the new share minus the old share.

Related tags

Partnership AccountsRetirement Of PartnerGaining RatioNew Profit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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