Practicing Success
Practicing Success
CUET Preparation Today
| What will a retiring partner get, till the amount due to him on his retirement is not paid by the firm? |
Interest on his due amount @ 9%p.a. Interest on his due amount @ 6%p.a. Share of profits earned by use of amount due to him Either option 2 or 3 |
| Either option 2 or 3 |
| The outgoing partner’s account is settled as per the terms of partnership deed i.e., in lumpsum immediately or in various instalments with or without interest as agreed or partly in cash immediately and partly in instalment at the agreed intervals. In the absence of any agreement, Section 37 of the Indian Partnership Act, 1932 is applicable, which states that the outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (i.e., based on capital ratio). Hence, the total amount due to the retiring partner which is ascertained after all adjustments have been made is to be paid immediately to the retiring partner. In case the firm is not in a position to make the payment immediately, the amount due is transferred to the retiring Partner’s Loan Account, and as and when the amount is paid it is debited to his account. |
