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

Answer and explanation

Correct answer: 1:1

A and B originally had shares of 2/10 each. Under the new ratio of 1:1, each receives 1/2, or 5/10. Therefore, each partner’s gain is 5/10 − 2/10 = 3/10. Since both gains are equal, the gaining ratio is 3/10:3/10 = 1:1. Exam tip: Calculate gaining ratio as new share minus old share, then reduce it to the simplest form.

Related tags

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

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