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A, B and C share profits in the ratio 6:2:2. After A's retirement, the new profit-sharing ratio of B and C is fixed at 5:5. Which statement correctly describes the change?

Answer and explanation

Correct answer: B and C gained equally

Under the old ratio of 6:2:2, both B and C had a share of 2/10. Under the new ratio of 5:5, each receives 5/10. Therefore, B's gain is 5/10 − 2/10 = 3/10, and C's gain is also 3/10. Hence, both partners gained equally. Exam tip: In retirement questions, calculate each continuing partner's gain as new share minus old share.

Related tags

Retirement Of PartnerNew RatioGaining RatioPartnership AccountsAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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