How the outgoing partner’s account is settled at the time of retirement of a partner from the partnership firm?
A) Lumpsum payment
B) Transfer to current A/c
C) Transfer to Capital A/c
D) Payment in installments
E) Transfer to capital reserve
F) Transfer to general reserve

 A & D

The correct answer is option 2-  A & D.

Upon the retirement of an outgoing partner, the settlement of their account is determined according to the provisions specified in the partnership deed. This settlement can occur either as a lump sum payment immediately or in multiple installments, with or without interest, as agreed upon. Alternatively, it can also be settled partially in cash at the time of retirement, with the remaining amount paid in subsequent installments at agreed intervals. In cases where there is no specific agreement in place, Section 37 of the Indian Partnership Act, 1932 comes into effect. This section grants the outgoing partner the option to choose between receiving interest at a rate of 6% per annum until the date of payment or receiving a proportionate share of the profits generated using their invested capital, based on the capital ratio. The total amount due to the retiring partner, determined after all necessary adjustments have been made, is to be promptly paid to them. If the firm is unable to make the payment immediately, the outstanding amount is instead recorded as a transfer to the retiring Partner's Loan Account. Subsequently, any payments made towards the amount owed are debited to the retiring Partner's account.