Partnership

Retirement/Death

Easy

common

At the time of retirement of a partner, the difference between the Old Profit Sharing Ratio and the New Profit Sharing Ratio is a negative outcome for a remaining partner. It indicates that :-

remaining partner is gaining.

remaining partner is sacrificing.

outgoing partner is sacrificing.

outgoing partner is gaining.

✅ Correct Option: 1

When a partner retires, the remaining partners acquire the retiring partner's share, which affects their profit sharing ratios.

The question states that for a remaining partner:

Old Ratio - New Ratio = Negative value

This can be rewritten as:

Old Ratio < New Ratio

New Ratio > Old Ratio

When the New Profit Sharing Ratio is greater than the Old Profit Sharing Ratio, it means the remaining partner's share in profits has increased after retirement.

An increase in profit share means the remaining partner will now receive a larger portion of profits than before. This is clearly a gain for the remaining partner.

For example: If a partner's share increases from $\frac{2}{5}$ to $\frac{1}{2}$ , then:

Old - New = $\frac{2}{5}$ - $\frac{1}{2}$ = $\frac{4-5}{10}$ = $\frac{-1}{10}$ (negative)

The partner's share increased from 40% to 50%, which is a gain of 10%.

The concept of "sacrificing" applies when a partner gives up a portion of their share (Old > New), not when they acquire more share. Therefore, remaining partner is gaining is the correct answer.

2025: 29 May Shift 2

At the time of death of a partner, undistributed Losses appearing in the balance sheet of the old firm is transferred to the capital account of:

2025: 22 May Shift 1

R, S and K are partners sharing profits in the ratio 8:6:4. On the retirement of R, the new profit sharing ratio between S and K was decided to be 5:3. The Gaining ratio is -

2026: 20 May Shift 1

A, B and C were partners in a firm sharing profits and losses in the ratio of 5:4:1. B died on June 30, 2025. The profit for the previous three years were Rs 68,000 (For 2022-23), Rs 77,000 (For 2023-24), Rs 50,000 (2024-25) while the sales during the year 2024-25 were Rs. 4,00,000 and the sales from April 1, 2025 to June 30, 2025 were Rs. 75,000. Find the profits that the firm must have earned from the date of closing of last year's balance sheet till the date of death of B.

2022: 15 July Shift 2

A, B and C are partners in a firm sharing profits in the ratio 7:4:4. B retires and on the day of his retirement Goodwill existed in the books at 30,000. B's Capital A/c will be debited by

2026: 11 May Shift 2

On retirement/death of a partner, the remaining partner(s) who have gained due to change in profit sharing ratio should compensate the:

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?

At the time of retirement of a partner, the difference between the Old Profit Sharing Ratio and the New Profit Sharing Ratio is a negative outcome for a remaining partner. It indicates that :-

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