On retirement or death of a partner, the remaining partners who have gained due to change in the profit sharing ratio should compensate the:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Remaining partners (who have sacrificed) as well as retiring partners
When the new ratio among the continuing partners is not just their old ratio, one continuing partner may end up with a smaller share than before, while another gains. The gaining partners then pay for everything they gained: the retiring partner’s share and any share given up by a continuing partner.
Why the other options are incorrect
Option (2) Remaining partners only (who have sacrificed) — Incorrect. It leaves out the retiring partner, who gives up his entire share.
Option (3) Retiring partners only — Incorrect. A continuing partner whose share falls has also made a sacrifice and must be compensated.
Option (4) None of the partners — Incorrect. Gaining a share of future profits without paying for it would be unfair to those who give it up.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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