Partnership

Retirement/Death

Medium

common

Arrange the various accounting aspects involved on retirement or death of a partner-

(A) Ascertainment of share of profit or loss up to the date of retirement/death

(B) Ascertainment of new profit sharing ratio and gaining ratio

(C) Distribution of accumulated profits and losses

(D) Settlement of the amounts due to retired/deceased partner

Choose the correct answer from the options given below:

(B), (C), (D), (A)

(B), (C), (A), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

(B), (C), (D), (A)

(B), (C), (A), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

✅ Correct Option: 2

When a partner retires or dies, the accounting treatment follows a specific logical sequence:

First (B) - The new profit sharing ratio among the continuing partners must be determined. This also helps in calculating the gaining ratio, which shows how much each continuing partner gains from the retiring/deceased partner's share. This is essential before any adjustments can be made.

Second (C) - All accumulated profits and losses (like reserves, undistributed profits, general reserve) are distributed among all partners including the retiring/deceased partner in their old profit sharing ratio. This must be done before calculating the partner's final dues.

Third (A) - The retiring/deceased partner's share of profit or loss from the beginning of the accounting year up to the date of retirement/death is ascertained. This is typically calculated on time basis or turnover basis and credited/debited to the partner's capital account.

Fourth (D) - Finally, after all adjustments are complete, the total amount due to the retired partner (or legal heirs of deceased partner) is determined and settled. This amount is either paid immediately or transferred to their loan account for deferred payment.

The correct sequence is: (B), (C), (A), (D)

Correct Answer: Option 2

2025: 22 May Shift 2

Match List-I with List-II

At the time of retirement following Transactions took place. Chose the correct treatment

List-I	List-II
(Particulars )	(Treatment )
(A) Asset taken over by the partner	(I) Debit side of Revaluation A/C
(B) Increase in Assets	(II) Written off amongst old partners in old ratio
(C) Unrecorded Liability	(III) Debit side of Partners Capital A/C
(D) Goodwill Appearing in books	(IV) Credit side of Revaluation A/C

Choose the correct answer from the options given below:

2026: 21 May Shift 2

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	Profit and loss Suspense A/c	I. Admission or Retirement of a partner
B.	The outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (i.e. based on capital ratio)	II. Hidden Goodwill
C.	Revaluation A/c	III. Section 37 of the Indian Partnership Act 1932
D.	It has to be inferred from the arrangement of the capital and profit sharing ratio	IV. Death of a partner

Choose the correct answer from the options given below:

2026: 6 June Shift 1

Bhanu, Chaman and Dev were partners in a firm sharing profits in the ratio of 5:4:1. The profit of the firm for the year ending on March 31, 2025 was Rs.1,00,000. Chaman died on August 31, 2025. Bhanu and Dev decided to share future profits equally. It was decided that share of profit of the deceased partner will be worked out on the basis of sales, and it is specified that the sales during the year 2024-25 were Rs. 8,00,000 and the sales from April 1, 2025 to August 31, 2025 were Rs. 1,50,000. Chaman's share of profit for the period from April 1 to August 31, 2025 shall be:

2025: 15 May Shift 2

L, N and T are partners sharing profits in the ratio of 5:3:2. If N retires, the gaining ratio of L & T would be.......

2023: 11 June Shift 3

Using the information given in the case study, calculate Deepali's amount of sacrifice or gain in Goodwill.

2026: 31 May Shift 1

Arrange the steps in order at the time of retirement of a partner.

A. Transfer of retired partner share of profit.

B. Calculation of goodwill.

C. Settlement of retiring partner capital.

D. Revaluation of assets & liabilities

Choose the correct answer from the options given below:

Solution

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