Partnership

Retirement/Death

Easy

common

The retiring partner is entitled to his share of goodwill at the time of retirement because goodwill has been earned by the firm through the efforts of all existing partners. If goodwill does not appear in the firm's books of accounts, the correct journal entry for treatment of goodwill in this case is:

Gaining Partners' Capital A/c Dr.

To Retiring Partners' Capital A/c

(Share in goodwill of retiring partner adjusted)

Retiring Partners' Capital A/c Dr.

To Gaining Partners' Capital A/c

(Share in goodwill of retiring partner adjusted)

Sacrificing Partners' Capital A/c Dr.

To Gaining Partners' Capital A/c

(Share in goodwill of retiring partner adjusted)

Gaining Partners' Capital A/c Dr.

To Old Partners' Capital A/c

(Share in goodwill of retiring partner adjusted)

✅ Correct Option: 1

On retirement the continuing partners acquire the outgoing partner's share, so they must compensate him. Since goodwill is not recorded in the books, no Goodwill Account is raised; instead the gaining partners' capital accounts are debited in their gaining ratio and the retiring partner's capital account is credited with his share of goodwill.

2026: 23 May Shift 2

X, Y and Z are partners sharing the profits in the ratio of 6:3:1. Y retires from the firm and his share is taken up by X and Z in the ratio of 3:2. The new profit sharing ratio of X and Z will be

2026: 29 May Shift 2

Puja, Priya, Pratistha are partners sharing profits and losses in the ratio of 5 : 3 : 2. Priya retires. Her share is taken by Puja and Pratistha equally. Calculate the gaining ratio.

2025: 15 May Shift 1

Rana, Sana and Kamana are partners, sharing profits in the ratio 4:3:2. Rana retires; Sana and Kamana decided to share profits in the future in the ratio of 5:3. The Gaining Ratio of Sana and Kamana will be

2025: 29 May Shift 2

When a partner retires in the middle of the year and his share of profit is calculated based on previous years' profit. Which of the following account is to be debited?

2026: 13 May Shift 2

Consider the following and select the correct statements

(A) The ratio in which the continuing partners acquire the outgoing partner's share is called the Gaining Ratio.

(B) The ratio in which the continuing partners acquire the outgoing partner's share is called the Sacrificing Ratio.

(C) In the event of the death of a partner, the amount of general reserve is transferred to partners' capital accounts in the new profit sharing ratio.

(D) On the admission of a new partner, the old partnership is dissolved.

Choose a pair of correct statements from the given options 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:

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