Various accounting aspects involved on retirement or death of a partner are as follows

(A) Adjustment in respect of unrecorded assets and liabilities

(B) Treatment of goodwill

(C) Preparation of Realization A/c

(D) Preparation of Executor's A/c

Choose the correct answer from the options given below:

When a partner retires or dies, the firm continues its operations (reconstitution), unlike dissolution where the firm ceases to exist.

Let's examine each aspect:

(A) Adjustment in respect of unrecorded assets and liabilities - This is necessary during retirement/death. All unrecorded assets (like investments) and unrecorded liabilities (like outstanding expenses) must be brought into books through Revaluation Account so that the retiring/deceased partner receives their correct share of profits or losses.

(B) Treatment of goodwill - This is essential during retirement/death. The retiring/deceased partner must be compensated for their share in the firm's goodwill, as they contributed to building it. This is adjusted either by premium method, revaluation method, or through gaining partners' capital accounts.

(C) Preparation of Realization A/c - This is NOT prepared on retirement/death. Realization Account is prepared only when the entire partnership firm is dissolved and wound up. Since the firm continues after retirement/death with remaining partners, there is no realization account.

(D) Preparation of Executor's A/c - This is prepared specifically when a partner dies. The amount due to the deceased partner is transferred to Executor's Account (representing legal heirs). Similarly, during retirement, the amount due is transferred to Retiring Partner's Loan Account.

The correct aspects involved are (A), (B) and (D) only.

Correct Answer: Option 2