On retirement of a partner, the retiring partner's capital account will be credited with.................
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → His/her share of goodwill
The retiring partner is paid for his share of the firm’s goodwill, which the continuing partners take over. So his capital account is credited with his own share of goodwill, and the gaining partners’ capital accounts are debited in their gaining ratio. This is the book’s own Test your Understanding item; its answer key gives (a).
Why the other options are incorrect
Option (2) Goodwill of the firm — Incorrect. The retiring partner owns only his share of the goodwill, not the whole of it.
Option (3) Share of goodwill of remaining partners — Incorrect. The remaining partners’ shares stay with them; they are not paid to the retiring partner.
Option (4) His/her share of goodwill and Share of goodwill of remaining partners — Incorrect. This would credit him with the whole goodwill again.
NCERT (2026-27 edition):
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