Match the LIST-I with LIST-IILIST-ILIST-IIA.Profit and loss Suspense…

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	Profit and loss Suspense A/c	I.	Admission or Retirement of a partner
B.	The outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (i.e. based on capital ratio)	II.	Hidden Goodwill
C.	Revaluation A/c	III.	Section 37 of the Indian Partnership Act 1932
D.	It has to be inferred from the arrangement of the capital and profit sharing ratio	IV.	Death of a partner

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → A-IV, B-III, C-I, D-II

Each item in List-I names an account or a rule met when a partner joins, leaves or dies.

(A) Profit and loss Suspense A/c — this matches (IV) Death of a partner. A partner who dies during the year is credited with his share of profit up to the date of death through this account, which is closed later against the gaining partners.

(B) The outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (i.e. based on capital ratio) — this matches (III) Section 37 of the Indian Partnership Act 1932. The section applies when nothing has been agreed about paying the outgoing partner and the amount stays with the firm.

(C) Revaluation A/c — this matches (I) Admission or Retirement of a partner. Assets and liabilities are revalued so that the gain or loss up to the change is shared by the right partners.

(D) It has to be inferred from the arrangement of the capital and profit sharing ratio — this matches (II) Hidden Goodwill. When the value of goodwill is not given, it is worked out from the capital brought in and the share taken by the new partner.

Note: It seems that there is a mistake in the original NTA paper: items (A) and (C) are not tied to one entry each. A Profit and Loss Suspense A/c is also opened when a partner retires in the middle of the year, and a Revaluation A/c is also prepared when a partner dies, so each could go with (I) or (IV). The question can still be solved, because items (B) and (D) fit one entry only, and Option (4) is the only option that pairs them as (B)-(III) and (D)-(II).

NCERT (2026-27 edition):
Death of a Partner

Extract from the NCERT textbook

NCERT (2026-27 edition):
Disposal of Amount Due to Retiring Partner – “The outgoing partner’s account is settled as per the terms of partnership deed i.e., in lumpsum immediately or in various instalments with or without interest as agreed or partly in cash immediately and partly in instalment at the agreed intervals. In the absence of any agreement, Section 37 of the Indian Partnership Act, 1932 is applicable, which states that the outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (i.e., based on capital ratio).”

NCERT (2026-27 edition):
Hidden Goodwill – “… Sometimes the value of goodwill is not given at the time of admission of a new partner. In such a situation it has to be inferred from the arrangement of the capital and profit sharing ratio.”

NCERT (2026-27 edition):
Revaluation of Assets and Reassessment of Liabilities – “At the time of admission of a new partner, it is always desirable to ascertain whether the assets of the firm are shown in books at their current values. In case the assets are overstated or understated, these are revalued. Similarly, a reassessment of the liabilities is also done so that these are brought in the books at their correct values. At times there may also be some unrecorded assets and liabilities of the firm. These also have to be brought into the books of the firm. For this purpose the firm has to prepare the Revaluation Account.”