Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

From the following identify the items which are payable to retiring p…

From the following identify the items which are payable to retiring partner, if mentioned in deed:

A. Credit balance of his/her Capital/Current Account
B. Share of goodwill
C. Goodwill of the firm
D. Share in revaluation gain/loss
E. Share in accumulated profits (Reserves)

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → A, B, D, E only

A retiring partner is paid what belongs to him in the firm:

(A) Credit balance of his/her Capital/Current Account — True. It is the base of his claim.
(B) Share of goodwill — True. He gives up his share of future profits, so he is paid his share of goodwill.
(C) Goodwill of the firm — False. He gets only his share of goodwill, not the whole goodwill of the firm.
(D) Share in revaluation gain/loss — True. A gain is added to his claim (a loss is deducted).
(E) Share in accumulated profits (Reserves) — True. Reserves were built from profits he shared.

NCERT (2026-27 edition):
Ascertaining the Amount Due to Retiring/Deceased Partner – “The sum due to the retiring partner (in case of retirement) and to the legal representatives/ executors (in case of death) includes: (i) credit balance of his capital account; (ii) credit balance of his current account (if any); (iii) his share of goodwill; (iv) his share of accumulated profits (reserves); (v) his share in the gain of revaluation of assets and liabilities; (vi) his share of profits up to the date of retirement/death; (vii) interest on his capital, if involved, up to the date of retirement/death; and (viii) salary/commission, if any, due to him up to the date of retirement/death.”