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A, B and C share profits in the ratio 3:2:5. C retires, and the new profit-sharing ratio of A and B becomes 6:4. What is the correct gaining ratio of A and B?

Answer and explanation

Correct answer: 3:2

Under the old ratio, A’s share was 3/10 and B’s share was 2/10. Expressing the new ratio 6:4 on a base of 10 gives A’s share as 6/10 and B’s share as 4/10. Thus, A’s gain = 6/10 − 3/10 = 3/10, and B’s gain = 4/10 − 2/10 = 2/10. Therefore, the gaining ratio is 3:2. Option C is the new profit-sharing ratio, not the gaining ratio. Exam tip: Gaining ratio = New ratio − Old ratio.

Related tags

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

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