At the time of retirement of a partner, arrange the following accounts in the correct sequence.
(A) Partners' Current A/c
(B) Revaluation A/c
(C) Balance Sheet
(D) Partners' Capital A/c
Choose the correct answer from the options given below:
At the time of retirement of a partner, arrange the following accounts in the correct sequence.
(A) Partners' Current A/c
(B) Revaluation A/c
(C) Balance Sheet
(D) Partners' Capital A/c
Choose the correct answer from the options given below:
Solution
Revaluation Account (B) is prepared first so that the gain or loss on assets and liabilities is known. Under the fixed capital method, adjustments such as salary, interest and drawings pass through the Partners' Current Account (A) next.
The Current Account balance is then carried into the Partners' Capital Account (D), and only after all accounts are closed is the new Balance Sheet (C) drawn up.
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