Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

The sum due to the retiring partner and to the legal representatives/…

The sum due to the retiring partner and to the legal representatives/executors (in case of death) includes the following, in addition to credit balance of his capital/current A/c, share of goodwill, gain on revaluation of assets and liabilities:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Share in accumulated profits and profits up to the date of retirement/death

Besides his capital, goodwill and revaluation gain, the outgoing partner is entitled to his share of the reserves built up in the past and of the profit earned in the current year up to the day he leaves. The firm’s assets are not handed over to him, contributions by other partners are not part of his dues, and realisation profit arises only on dissolution of the firm.

NCERT (2026-27 edition):
Ascertaining the Amount Due to Retiring/ Deceased Partner – “The sum due to the retiring partner (in case of retirement) and to the legal representatives/ executors (in case of death) includes: (i) credit balance of his capital account; (ii) credit balance of his current account (if any); (iii) his share of goodwill; (iv) his share of accumulated profits (reserves); (v) his share in the gain of revaluation of assets and liabilities; (vi) his share of profits up to the date of retirement/death; (vii) interest on his capital, if involved, up to the date of retirement/death; and (viii) salary/commission, if any, due to him up to the date of retirement/death.”

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Share in accumulated profits and profits up to the date of retirement/death