Chapter 6: Retirement/Death of Partner
What is retirement? What are the circumstances of retirement of a partner? Find the answers to these questions and test your knowledge too!
Details
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).
Curriculum
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1. State the circumstances of the retirement of a partner1 m
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2. Which important accounting aspects are considered at the time of the retirement or death of a partner ?1 m
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3. Which balances are credited to all partners’ capital accounts in their old profit-loss sharing ratio?1 m
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4. Which balances are debited to all partners’ capital accounts in their old profit-loss sharing ratio?1 m
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5. Explain accounting treatment of old goodwill appearing in the balance sheet of the firm at the time of the retirement of a partner.1 m
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6. Explain accounting treatment of the new goodwill of the firm valued at the time of the retirement of a partner.1 m
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7. When and why is the profit and loss adjustment account (Revaluation Account) prepared?1 m
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8. Who gives the share in goodwill to the retiring or deceased partner? Why?1 m
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Practice Quiz18 questions
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1. Which reserves are not to be distributed among partners ?1 m
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2. Explain the meaning of sacrifice share.1 m
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3. Explain the meaning of gain share.1 m
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4. Why assets and Liabilities of a firm are revalued at the time of retirement or death of a partner ?1 m
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5. What is memorandum Revaluation Account ? OR What is Memorandum profit and loss adjustment account ?1 m
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6. What is Revaluation Account ? Or What is profit and loss adjustment Account ?1 m
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7. State the period upto which the retired partner is liable to receive the part of profit from the firm.1 m
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8. Why is a Joint Life Insurance Policy Reserve account created?1 m
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9. State the various methods of accounting treatments for joint life insurance policy in the books of the firm.1 m
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10. State the methods for the redemption of the final dues of a retiring partner.1 m
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11. As per Indian Partnership Act 1932 , what is the provision for unpaid amount / loan amount to the retiring partner ?1 m
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12. State the type of account for Joint Life insurance policy.1 m
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13. State the circumstances of a Partner’s retirement.1 m
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14. In which ratio, reserves and funds shown in the balance sheet are credited to partners’ capital account at the time of retirement or death of a partner ?1 m
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15. In which ratio, balance of profit and loss account distributed among partners, at the time of retirement of partner ?1 m
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16. An active partner is required to give public notice regarding his retirement. Why?1 m
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17. In case of insolvency of partner, from which date does his partnership end?1 m
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Chapter 6 Practice Material900 KB
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One Line Answer and Theory1.1 MB
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