At the time of retirement of a partner, Advertisement Suspense A/c appearing in the balance sheet would be :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Debited to old partners’ capital account
Advertisement Suspense is the part of advertisement expenditure not yet written off. It sits in the balance sheet as an accumulated loss, and an accumulated loss belongs to all the partners who were there when it arose. So on retirement it is written off to all the old partners’ capital accounts in the old ratio, the retiring partner included.
The entry is All Partners’ Capital A/cs (individually) Dr., To Advertisement Suspense A/c. The retiring partner bears his share before the amount due to him is settled.
Why the other options are incorrect
Option (1) Debited to remaining partners’ capital account — Incorrect. This leaves the retiring partner out, though the loss arose while he was a partner.
Option (3) Debited to gaining partners’ capital account — Incorrect. The gaining ratio is used for the retiring partner’s share of goodwill, not for accumulated losses.
Option (4) Credited to old partners’ capital account — Incorrect. A loss reduces the partners’ claims, so their capital accounts are debited, not credited.
NCERT (2026-27 edition):
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