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A, B and C share profits and losses in the ratio 2:4:4. After C retires, the new profit-sharing ratio of A and B is 3:7. What is A’s gain?

Answer and explanation

Correct answer: 1/10

A’s old share was 2/(2+4+4) = 2/10. After C’s retirement, A’s new share is 3/(3+7) = 3/10. Therefore, A’s gain = new share − old share = 3/10 − 2/10 = 1/10. Option B represents A’s new share, not the gain. Exam tip: Always calculate gain by subtracting the old share from the new share.

Related tags

Partner RetirementGain CalculationNew Profit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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