What is retirement? What are the circumstances of retirement of a partner? Find the answers to these questions and test your knowledge too!
When one of the partner retires from the firm, it is known as retirement.
As per the Indian Partnership Act, 1932, when a partner retires from a firm due to any reason, or when he dies, the partnership ends but the firm is not dissolved. Remaining partners can continue the firm and its business.
For this purpose, necessary accounting treatments of retirement are required to be given in the books of the firm. In this situation, a partnership is reconstituted (reconstructed).