The sum due to the retiring partner in case of retirement and to the legal representatives/ executors in case of death includes:
A. His share of goodwill
B. Credit balance of his current account
C. Salary/commission, if any
D. Provision for doubtful debts
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → A, B and C only
What is due to a retiring partner, or to a deceased partner’s executors, is the balance of his capital account after every adjustment on his way out.
A. His share of goodwill Correct. Goodwill was earned while he was a partner, so the gaining partners compensate him for the share they take over.
B. Credit balance of his current account Correct. It is money the firm already owes him, and it is added to his claim.
C. Salary/commission, if any Correct. Salary or commission earned up to the date he leaves is due to him.
D. Provision for doubtful debts Incorrect. A provision for doubtful debts is an estimate set against debtors, not a sum payable to anyone. If it changes on retirement, the change goes through the Revaluation Account, and the partner gets only his share of the revaluation gain or loss.
NCERT (2026-27 edition): |