Various accounting aspects involved on retirement or death of a partn…

Various accounting aspects involved on retirement or death of a partner are as follows:

(A) Adjustment in respect of unrecorded assets and liabilities

(B) Treatment of goodwill

(D) Preparation of Executor's A/c

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

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

On retirement or death the firm continues with the remaining partners, so the adjustments are like those on admission: new and gaining ratio, goodwill, revaluation, unrecorded items, accumulated profits and losses, and the settlement of the amount due to the outgoing partner.

(A) Adjustment in respect of unrecorded assets and liabilities Correct. Assets and liabilities not in the books are brought into account through the Revaluation Account.

(B) Treatment of goodwill Correct. The outgoing partner is paid his share of goodwill by the gaining partners.

(C) Preparation of Realization A/c Incorrect. A Realisation Account is prepared only on dissolution of the firm, when all assets are sold and liabilities paid; on retirement or death the firm goes on.

(D) Preparation of Executor’s A/c Correct. On death, the amount due is transferred to the Executor’s Account to settle with the legal representatives.

NCERT (2026-27 edition):
Ascertaining the Amount Due to Retiring/Deceased Partner – “… Thus, similar to admission, the various accounting aspects involved on retirement or death of a partner are as follows: 1. Ascertainment of new profit sharing ratio and gaining ratio; 2. Treatment of goodwill; 3. Revaluation of assets and liabilities; 4. Adjustment in respect of unrecorded assets and liabilities; 5. Distribution of accumulated profits and losses; 6. Ascertainment of share of profit or loss up to the date of retirement/death; 7. Adjustment of capital, if required; 8. Settlement of the amounts due to retired/deceased partner; …”

NCERT (2026-27 edition):
Disposal of Amount Due to Retiring Partner – “… It may noted that the accounting treatment for disposal of amount due to retiring partner and deceased partner is similar with a difference that in case of death of a partner, the amount credited to him/her is transferred to his Executors’ Account and the payment has to be made to him/her. This shall be taken up later in this chapter.”