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A, B and C share profits and losses in the ratio 3:5:2. C retires, and the new ratio of A and B becomes 2:3. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:1

Under the old ratio 3:5:2, A’s share was 3/10 and B’s share was 5/10. Under the new ratio 2:3, A’s share becomes 2/5 = 4/10 and B’s share becomes 3/5 = 6/10. Thus, A gains 4/10 − 3/10 = 1/10, while B gains 6/10 − 5/10 = 1/10. Therefore, their gaining ratio is 1/10:1/10 = 1:1. Remember that 2:3 is the new ratio, not the gaining ratio.

Related tags

Gaining RatioNew RatioRetirement Of PartnerPartnership AccountingProfit SharingNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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