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A, B and C share profits in the ratio 1:3:6. C retires, and the new profit-sharing ratio of A and B becomes 2:3. What will be the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:1

Under the old ratio, A’s share was 1/10 and B’s share was 3/10. Under the new ratio 2:3, A’s share becomes 2/5, or 4/10, and B’s share becomes 3/5, or 6/10. Thus, A’s gain is 4/10 − 1/10 = 3/10, while B’s gain is 6/10 − 3/10 = 3/10. Therefore, the gaining ratio is 3/10 : 3/10 = 1:1. Exam tip: calculate each continuing partner’s new share minus old share; do not use the new ratio directly as the gaining ratio.

Related tags

Gaining RatioRetirement Of PartnerNew Profit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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