If a partner retires in the middle of the year his/her share of profit from the date of last balance sheet till the date of retirement will be transferred to..............
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Profit & Loss Suspense A/c debit side
A partner who retires in the middle of the year is entitled to his share of profit from the date of the last balance sheet to the date of retirement. The books are not closed on that date, so his share is estimated and recorded through a temporary account: Profit & Loss Suspense A/c Dr. To Retiring Partner’s Capital A/c. The suspense account is debited; it is later closed against the continuing partners’ capital accounts.
Why the other options are incorrect
Option (1) Profit & Loss A/c credit side — Incorrect. The Profit and Loss Account is prepared only at the end of the year; the share is recorded through a suspense account.
Option (3) Retiring Partners Capital A/c debit side — Incorrect. The share of profit is due to the retiring partner, so his capital account is credited.
Option (4) Profit & Loss Suspense A/c credit side — Incorrect. The suspense account is debited; the retiring partner’s capital account takes the credit.
NCERT (2026-27 edition): NCERT (2026-27 edition):
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