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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 becomes 1:2. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 1:5

Before C’s retirement, A’s share was 3/10 and B’s share was 5/10. Under the new ratio 1:2, A’s share becomes 1/3 and B’s share becomes 2/3. Therefore, A’s gain is 1/3 − 3/10 = 1/30, while B’s gain is 2/3 − 5/10 = 1/6 = 5/30. Hence, the gaining ratio is 1/30 : 5/30 = 1:5. Option 1:2 is the new profit-sharing ratio, not the gaining ratio. Exam tip: Calculate each partner’s gain as new share minus old share, then simplify the ratio of gains.

Related tags

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

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