Question

A and B were partners in a firm sharing profit or loss equally. With effect from 1st April, 2023 they agreed to share profits in the ratio of 4 : 3. Due to change in profit sharing ratio, A's gain or sacrifice will be:

Options

• Gain `1/14`

• Sacrifice `1/14`

• Gain `4/7`

• Sacrifice `3/7`

Answer 1

Gain `bb(1/14)`

Explanation:

Given:

Old Profit Sharing Ratio of A and B = 1 : 1

New Profit Sharing Ratio = 4 : 3

Calculation of A's Gain/Sacrifice:

A's old share = `1/2`

A's new share = `4/7`

Since A's new share is more than his old share:

Gain = New Share − Old Share

= `4/7` − `1/2`
= `(8 − 7)/14`
= `1/14`

Therefore, A gains `1/14`.