At the time of retirement of a partner, the retiring partner's Capital account will be credited with:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → His/Her share of Goodwill
On retirement the retiring partner gives up his share of future profits. He is compensated by crediting his capital account with his share of goodwill, debited to the gaining partners in their gaining ratio.
Option (2) Goodwill of the firm — Incorrect. He is entitled only to his own share, not the whole goodwill.
Option (3) Share of Goodwill of remaining partners — Incorrect. The remaining partners keep their shares; they pay for his share.
Option (4) Undistributed losses — Incorrect. Undistributed losses are debited to all partners’ capital accounts, not credited.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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