At the time of retirement of a partner, arrange the following account…

At the time of retirement of a partner, arrange the following accounts in the correct sequence.

(A) Partners' Current A/c

(B) Revaluation A/c

(D) Partners' Capital A/c

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

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

On retirement, the books are closed in the order in which each account feeds the next.

(B) Revaluation A/c — first, because the gain or loss on revaluing assets and liabilities has to be found before any partner’s balance is settled.

(A) Partners’ Current A/c — next: where capitals are fixed, the year’s items such as share of profit, interest on capital and drawings sit in the current accounts, and these are completed so that their balances are final.

(D) Partners’ Capital A/c — then, where the balances of the current accounts are brought in and the amount due to the retiring partner is found.

(C) Balance Sheet — last, since it is drawn up from the closing balances of all the accounts above.

NCERT (2026-27 edition):
Adjustment for Revaluation of Assets and Liabilities – “… As learnt in case of admission of a partner, a Revaluation Account is prepared in order to ascertain net gain (loss) on revaluation of assets and/or liabilities and bringing unrecorded items into firm’s books and the same is transferred to the capital account of all partners including retiring/deceased partners in their old profit sharing ratio.”

NCERT (2026-27 edition):
Maintenance of Capital Accounts of Partners – “… (a) Fixed Capital Method: Under the fixed capital method, the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners. All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in a separate accounts, called Partner’s Current Account.”

NCERT (2026-27 edition):
Learning Objectives – “… • prepare the deceased partner’s executor’s account in the case of death of a partner and the balance sheet of a reconstituted firm.”