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

Answer and explanation

Correct answer: 1/5

B’s old share was \(2/10=1/5\). After C’s retirement, B’s new share under the ratio 3:2 is \(2/5=4/10\). Therefore, B’s gaining share = new share − old share = \(4/10-2/10=2/10=1/5\). Option 2/5 is B’s new share, not the gain. Exam tip: Always subtract the old share from the new share to calculate a partner’s gaining share.

Related tags

Partner RetirementGaining RatioNew Profit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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