Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

A, B, and C are partners with equal profit sharing ratios. Their fixe…

A, B, and C are partners with equal profit sharing ratios. Their fixed capitals are ₹30,000, ₹25,000 and ₹30,000 respectively. C decided to take retirement. A and B decided to continue the partnership firm and change their profit sharing ratio to Capital Ratio. What is the gaining Ratio of A and B?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → 7:4

When the new ratio of the continuing partners is given, the gaining ratio = new share − old share for each partner.

Old shares (equal) = A 1/3, B 1/3
New ratio = capital ratio = ₹30,000 : ₹25,000 = 6 : 5
New shares = A 6/11, B 5/11

A’s gain = 6/11 − 1/3 = (18 − 11)/33 = 7/33
B’s gain = 5/11 − 1/3 = (15 − 11)/33 = 4/33
Gaining ratio = 7 : 4

6 : 5 is the new profit sharing ratio, not the gaining ratio; 1 : 1 would be right only if they took C’s share in their old equal ratio.

NCERT (2026-27 edition):
Gaining Ratio – “The ratio in which the continuing partners have acquired the share from the retiring/deceased partner is called the gaining ratio.”

NCERT (2026-27 edition):
Gaining Ratio – “… The problem of calculating gaining ratio arises primarily when the new profit sharing ratio of the continuing partners is specified. In such a situation, the gaining ratio should be calculated by, deducting the old share of each continuing partners from his new share i.e., new profit share minus old profit share, i.e., new profit share minus old profit share.”