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A, B and C share profits in the ratio 9:5:1. C retires, and the new profit-sharing ratio of A and B is fixed at 2:1. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:0

Under the old ratio, A’s share was 9/15 and B’s share was 5/15. Under the new ratio of 2:1, A’s share becomes 10/15 and B’s share remains 5/15. Therefore, A’s gain is 10/15 − 9/15 = 1/15, while B’s gain is 5/15 − 5/15 = 0. Hence, the gaining ratio is 1/15:0 = 1:0. Exam tip: Gaining ratio is calculated as new share minus old share; do not subtract the retiring partner’s share separately from each continuing partner.

Related tags

Gaining RatioPartner RetirementNew RatioProfit Sharing RatioAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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