Partnership

Retirement/Death

Easy

common

In the absence of any information regarding the acquisition of share in profit of the retiring/deceased partner by the remaining partners, it is assumed that they will acquire his/her share in:

Gaining ratio

Equal Ratio

New Profit Sharing Ratio

Old Profit Sharing Ratio

✅ Correct Option: 4

When a partner retires or dies and there is no specific information about how the remaining partners will acquire the outgoing partner's share, the remaining partners are assumed to acquire it in their old profit sharing ratio.

This means the continuing partners will share the retiring/deceased partner's profit share in the same proportion in which they were sharing profits among themselves before the retirement/death.

Illustration:

Suppose A, B and C are partners sharing profits in the ratio 5:3:2. If C retires and no information is given about how A and B will acquire C's share:

Old ratio of A and B = 5:3

A and B will acquire C's share (2/10) in the ratio 5:3

A's gain = $\frac{2}{10} \times \frac{5}{8} = \frac{1}{8}$

B's gain = $\frac{2}{10} \times \frac{3}{8} = \frac{3}{40}$

New ratio of A and B = $\frac{5}{10} + \frac{1}{8}$ : $\frac{3}{10} + \frac{3}{40}$ = 5:3 (same as old ratio)

This assumption exists because in the absence of a new agreement, partners are presumed to continue their existing arrangement. The gaining ratio can only be determined when the new profit sharing ratio is specifically agreed upon and communicated.

2025: 16 May Shift 1

If nothing is mentioned, the amount due to retiring partner is transferred to _______.

2026: 20 May Shift 1

In case of death of a partner, for deceased partner's share of profits for the intervening period (from the closing of last year account till the date of death) in the books of accounts, the following journal entry is recorded:

Profit and Loss Supense A/c Dr.

To Deceased Partner's Capital A/c

Which of the following entry is to be made later to close the Profit and Loss Suspense Account?

2026: 11 May Shift 2

Arun, Bijay and Harish are partners in a firm sharing profits in the ratios of 8:5:3. It is felt that Bijay will no more be able to actively participate in the affairs of the firm. Hence, with effect from April 1, 2025, they decided that, in future they will share the profits in the ratio of 2:1:2. Bijay will:

2025: 22 May Shift 2

The major difference between Retirement and Death is

2025: 15 May Shift 1

Asha, Deepa and Lata are partners in a firm sharing profits in the ratio of 3 : 2 : 1. Deepa retires. After making all adjustments relating to revaluation, goodwill, Payment to Deepa and accumulated profit etc., the capital accounts of Asha and Lata showed a credit balance of Rs. 1,60,000 and Rs. 80,000 respectively. It was decided to adjust the capitals of Asha and Lata in their new profit sharing ratio. You are required to calculate the new capitals of the partners i.e Asha and Lata.

2026: 6 June Shift 1

Choose the correct combination related to death of a partner:

(A) In case of death of a partner his claim is transferred to his executors.

(B) Deceased partner's share of profit may be calculated on the basis of last year's profit or on the basis of sales.

(D) Deceased partner's claim shall include his interest on capital, interest on drawings (if any) till the date of his death.

In the absence of any information regarding the acquisition of share in profit of the retiring/deceased partner by the remaining partners, it is assumed that they will acquire his/her share in:

Solution

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)