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A, B and C share profits in the ratio 3:5:2. C retires, and the new profit-sharing ratio of A and B is fixed at 1:2. What is B’s gain?

Answer and explanation

Correct answer: \(\frac{1}{6}\)

B’s old profit share was \(\frac{5}{10}=\frac{1}{2}\). Under the new ratio 1:2, B’s new share is \(\frac{2}{3}\). Therefore, B’s gain = new share − old share = \(\frac{2}{3}-\frac{1}{2}=\frac{4-3}{6}=\frac{1}{6}\). Option C represents B’s old share, not the gain. Exam tip: calculate a partner’s gain by subtracting the old share from the new share.

Related tags

Gain CalculationPartner RetirementNew RatioProfit SharingNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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