Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

In the case of a partner retiring in the middle of the year, the claim shall include:

Options:

Share of profit or loss, interest on capital, interest on drawings if any, from the date of retirement to the date of the last balance sheet.

Share of profit or loss, interest on capital, interest on drawings if any, from the date of last balance sheet to the date of retirement.

Share of profit or loss, interest on capital, interest on drawings if any, from the beginning of the year to the date of retirement.

Share of profit or loss, interest on capital, interest on drawings if any, from the date of retirement to the end of the accounting period

Correct Answer:

Share of profit or loss, interest on capital, interest on drawings if any, from the date of last balance sheet to the date of retirement.

Explanation:

When a partner decides to retire in the middle of the year, their claim for the intervening period (the period from the date of the last balance sheet to the date of retirement) includes several components:
Share of profit or loss: The retiring partner is entitled to receive their share of the partnership's profits or bear their share of any losses for the period from the last balance sheet to the date of retirement.
Interest on capital: If the retiring partner has contributed capital to the partnership, they are entitled to receive interest on that capital for the intervening period.
Interest on drawings: If the retiring partner has made any drawings (withdrawals) from the partnership during the intervening period, they may be required to pay interest on those drawings.