The major difference between Retirement and Death is:

Retirement normally takes place at the end of an accounting period, and the death of a partner may occur at any time

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.

The major difference between Retirement and Death is Retirement normally takes place at the end of an accounting period, and the death of a partner may occur at any time.

The retirement or death of a partner also leads to reconstitution of a partnership firm. On the retirement or death of a partner, the existing partnership deed comes to an end, and in its place, a new partnership deed needs to be framed whereby, the remaining partners continue to do their business on changed terms and conditions. There is not much difference in the accounting treatment at the time of retirement or in the event of death. In both the cases, we are required to determine the sum due to the retiring partner (in case of retirement) and to the legal representatives (in case of deceased partner) after making necessary adjustments in respect of goodwill, revaluation of a assets and liabilities and transfer of accumulated profits and losses. In addition, we may also have to compute the new profit sharing’s ratio among the remaining partners and so also their gaining ratio.