A, B, C are equal partners in a firm. C retired at the end of the year. Which of the following will not be receiving by the retiring partner?
Answer & explanation
Correct answer: option 2
Correct answer: Option (2) → Share in Employees' Provident Fund
Concept: A retiring partner receives his share of everything belonging to the partners – goodwill, accumulated profits/reserves and revaluation profit – but not amounts that are external liabilities of the firm – see Reconstitution of a Partnership Firm – Retirement/Death of a Partner.
Employees’ Provident Fund is a statutory liability owed to employees, not a partners’ reserve; it is not distributable among partners, so the retiring partner receives no share of it. Goodwill, accumulated profits and revaluation profit, however, do belong to the partners and are credited to him.