Question

X, Y & Z are partners sharing profits and losses in the ratio of 3:2:1. Y retired from the firm. New profit sharing ratio between X & Z is 5:3. What is the gain ratio of the partners X & Z?

• A. 3:2
• B. 3:1
• C. 3:7
• D. 3:5

Answer 1

The correct option is D 3:5

Old Profit sharing ratio ( X, Y and Z ) = 3 : 2 : 1

New profit sharing ratio ( X and Z ) = 5 : 3

Gaining ratio = New ratio - Old ratio

X's gaining ratio = (5/8 ) - ( 3/6 ) = (3/24)

Z's gaining ratio = (3/8) = (1/6) = (5/24)

Therefore, gaining ratio of X and Z is 3 : 5