Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

Steps involved in various accounting aspects of retirement or death o…

Steps involved in various accounting aspects of retirement or death of a partner -

(A) Settlement of the amounts due to retired/deceased partner

(B) Ascertainment of new profit sharing ratio and gaining ratio

(D) Revaluation of assets and liabilities

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (B), (D), (C), (A)

(B) Ascertainment of new profit sharing ratio and gaining ratio

(D) Revaluation of assets and liabilities

(C) Adjustment of capital, if required

(A) Settlement of the amounts due to retired/deceased partner

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; …”