Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

The major difference between Retirement and Death is:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Retirement normally takes place at the end of an accounting period, and the death of a partner may occur at any time

Because death can come in the middle of the year, the deceased partner’s claim usually has to include his share of profit, interest on capital and the like for the period from the last balance sheet to the date of death.

NCERT (2026-27 edition):
Death of a Partner – “As stated earlier, the accounting treatment in the event of death of a partner is similar to that in case of retirement of a partner, and that in case of death of a partner his claim is transferred to his executors and settled in the same manner as that of the retired partner. However, there is one major difference that, while the retirement normally takes place at the end of an accounting period, the death of a partner may occur any time.”