In the event of retirement of partner, following deduction has to be made from his/her share...
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Debit balance of his current account (if any)
The amount due to a retiring partner is worked out in his capital account: what the firm owes him is credited, and what he owes the firm is deducted. A debit balance in his current account means he has drawn more than he was credited with, so it is deducted from his dues.
Why the other options are incorrect
Option (2) Credit balance of his capital account — Incorrect. A credit balance is money the firm owes him, so it is added to his dues.
Option (3) Credit balance of his current account (if any) — Incorrect. Like the capital balance, a credit balance is owed to him and is added.
Option (4) His/Her share of goodwill — Incorrect. His share of goodwill is credited to him; it increases what he receives.
NCERT (2026-27 edition): |