Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

In case of retirement, the profit and loss suspense account is closed…

In case of retirement, the profit and loss suspense account is closed by transferring the amount to the.........

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Gaining partners Capital Account

When a partner retires during the year, his share of profit up to that date is credited to him and debited to Profit and Loss Suspense Account. The remaining partners are the ones who give him this share out of their future profits, so the suspense account is later closed by transferring it to the gaining partners’ capital accounts in their gaining ratio.

NCERT (2026-27 edition):
When Partner Retires in the Middle of the Year – “… Later, Profit and Loss suspense account is closed by transferring the amount to the gaining partners capital account in their gaining ratio.”