At the time of retirement of a partner the remaining partners should compensate the........
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Retiring partners as well as remaining partners who have sacrificed.
At the time of retirement of a partner the remaining partners should compensate the Retiring partners as well as remaining partners who have sacrificed.
It may also happen that as a result of decision on the new profit sharing ratio among the remaining partners, a continuing partner may also sacrifice a part of his share in future profits. In such a situation his capital account will also be credited along with the retiring/deceased partner’s capital account in proportion to his sacrifice and the other continuing partners’ capital accounts will be debited based on their gain in the future profit ratio.