Which of the following statement is correct?

There may be hidden goodwill in the partnership

The correct answer is option 3- There may be hidden goodwill in the partnership.

1. After death, the firm should be closed - This is not true as the firm can continue with the remaining partners unless the partnership agreement states otherwise.

2. After death of a partner, the share of remaining partner's decrease - This is incorrect as the remaining partners' shares do not decrease but may be increased based on the deceased partner's share gained by them.

3. There may be hidden goodwill in the partnership- This is true. If the firm has agreed to settle the retiring or deceased partner’s account by paying him a lump sum amount, then the amount paid to him in excess of what is due to him, based on the balance in his capital account after making necessary adjustments in respect of accumulated profits and losses and revaluation of assets and liabilities, etc., shall be treated as his share of goodwill (known as hidden goodwill). 

4. At the time of retirement it is not necessary to prepare revaluation A/c - This is incorrect as a revaluation account is often prepared to reflect the current value of assets and liabilities at the time of retirement.