On retirement, the retiring partner's capital account will be credited with:
(A) His/Her Capital Balance
(B) His/Her share of goodwill
(C) Share of goodwill of remaining partners
(D) his/her share of Reserve
(E) his/her drawings
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- (A), (B) and (D) only.
The sum due to the retiring partner (in case of retirement) and to the legal representatives/ executors (in case of death) includes:
(i) credit balance of his capital account;
(ii) credit balance of his current account (if any);
(iii) his share of goodwill;
(iv) his share of accumulated profits (reserves);
(v) his share in the gain of revaluation of assets and liabilities
(vi) his share of profits up to the date of retirement/death;
(vii) interest on his capital, if involved, up to the date of retirement/death; and
(viii) salary/commission, if any, due to him up to the date of retirement/death.