P, Q and R were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. P died on 1st Septemb

Question

Q. P, Q and R were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. P died on 1st September, 2022. On the date of P's death, the profits of the firm were calculated as ₹ 80,000. P's share of profit will be adjusted by : (A) Debiting Profit and Loss Account with ₹ 40,000. (B) Debiting Profit and Loss Appropriation Account by ₹ 40,000. (C) Debiting Profit and Loss Suspense Account with ₹ 80,000. (D) Debiting Profit and Loss Suspense Account with ₹ 40,000.

(OR)

Pooja, Nita and Anita were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Pooja retired and her share is taken up by Nita and Anita equally. The new profit sharing ratio of Nita and Anita will be : (A) 2 : 1 (B) 7 : 5 (C) 1 : 1 (D) 3 : 2

CBSECBSE Class XII Board 2023MCQ· 1mImportance★★★★★

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Part (a)Concept understanding — Partnership Profit Distribution Rules

Partnership Capital Accounting — A First Look

Think of a partnership like a group of friends pooling money to start a roadside food stall. Each friend brings in some cash — that’s their capital. But unlike a simple piggy bank, a partnership needs a clear record of who put in how much, because profits (and losses) are shared in a fixed ratio, and partners may withdraw money, lend extra funds, or take a salary.

That record is what Partnership Capital Accounting is about.

What It Really Means

In accounting, capital is the amount a partner contributes to the firm. But it’s not just a one-time number. Over time, a partner’s capital changes due to:

Additional capital introduced
Drawings (money or goods taken out)
Share of profit or loss
Interest on capital, interest on drawings, partner’s salary, commission

The Capital Account of each partner tracks all these changes. It answers: What does the firm owe to this partner at any point?

Why It Matters

Without proper capital accounting, you cannot:

Determine each partner’s claim on the firm’s assets
Calculate interest on capital correctly
Prepare the Profit and Loss Appropriation Account
Settle accounts when a partner retires or dies

The NCERT textbook emphasises that capital accounts are personal accounts of the partners — they show the firm’s liability towards each partner.

Two Methods of Maintaining Capital Accounts

The NCERT Class 12 Accountancy textbook (Part II, Chapter 2) describes two methods:

1. Fixed Capital Method

Under this method, the capital account remains constant (except when additional capital is introduced or capital is withdrawn permanently). All other transactions — share of profit, drawings, interest, salary — are recorded in a separate Current Account.

Note

In the Fixed Capital Method, the Capital Account shows only the permanent capital. The Current Account shows the fluctuating balance.

2. Fluctuating Capital Method

Here, all transactions are recorded directly in the Capital Account. The capital balance changes every year.

Accounting Treatment — Which Account is Debited/Credited

Let’s take the most common entries. I’ll show the journal entry first, then explain.

Entry 1: Capital Introduced

When a partner brings in cash or assets:

Date	Particulars	L.F.	Debit (Rs)	Credit (Rs)
	Cash/Bank A/c	Dr.	xxx
	To Partner’s Capital A/c			xxx

Why? Cash comes in (asset increases — debit), and the firm’s liability to the partner increases (capital is a liability — credit).

Entry 2: Drawings

When a partner withdraws cash or goods for personal use:

Date	Particulars	L.F.	Debit (Rs)	Credit (Rs)
	Partner’s Capital/Current A/c	Dr.	xxx
	To Cash/Bank/Purchases A/c			xxx

Why? The firm’s liability to the partner decreases (debit the capital/current account), and cash or goods go out (credit).

Entry 3: Interest on Capital

This is an appropriation of profit. The formula (as per NCERT) is:

Interest on Capital = Capital × Rate of Time × Time (in months)/12

Journal entry:

Date	Particulars	L.F.	Debit (Rs)	Credit (Rs)
	Interest on Capital A/c	Dr.	xxx
	To Partner’s Capital/Current A/c			xxx

Then, at the end of the year, Interest on Capital is transferred to the Profit and Loss Appropriation Account:

Date	Particulars	L.F.	Debit (Rs)	Credit (Rs)
	Profit and Loss Appropriation A/c	Dr.	xxx
	To Interest on Capital A/c			xxx

Entry 4: Partner’s Salary

If the partnership deed allows a salary:

Date	Particulars	L.F.	Debit (Rs)	Credit (Rs)
	Salary to Partner A/c	Dr.	xxx
	To Partner’s Capital/Current A/c			xxx

Again, this is transferred to the Profit and Loss Appropriation Account.

Entry 5: Share of Profit

At the end of the year, after all appropriations, the remaining profit is distributed:

Date	Particulars	L.F.	Debit (Rs)	Credit (Rs)
	Profit and Loss Appropriation A/c	Dr.	xxx
	To Partner’s Capital/Current A/c			xxx

Formats as per NCERT

Format of Capital Account (Fluctuating Method)

Part (b)Concept understanding — Partner Retirement Methods

Partner Retirement Methods – A First Look

Think of a partnership like a three-legged race. Three friends tie their legs together and run. Now imagine one friend wants to stop running mid-race. The other two can't just untie and keep going — they have to settle accounts with the leaving friend first. How much does the leaving friend get? Who pays? That's what retirement of a partner is about.

What Does "Retirement of a Partner" Mean?

When a partner leaves the firm (by choice, age, or agreement), the remaining partners continue the business. The retiring partner is entitled to their share of the firm's net worth — not just their original capital, but also their share of accumulated profits, reserves, revaluation gains, and goodwill.

The key idea: the retiring partner's claim = what they brought in + what the firm earned on their behalf – what they've already taken out.

Why Does This Matter?

If you just give the retiring partner their capital back, you're shortchanging them. The firm may have grown, built up reserves, or owned assets that appreciated. Conversely, if the firm has losses, the retiring partner must bear their share. Proper accounting ensures fairness — no one gets cheated, and the remaining partners don't overpay.

The Accounting Treatment – Step by Step

The NCERT Class-12 textbook follows a clear sequence. Let's walk through it.

Step 1: Revalue Assets and Reassess Liabilities

The firm's balance sheet may not reflect current values. So we create a Revaluation Account.

Note

Revaluation Account is a nominal account. It captures gains (credit) and losses (debit) from revaluing assets and liabilities.

Journal entry:

If asset value increases: Debit Asset A/c, Credit Revaluation A/c
If liability increases: Debit Revaluation A/c, Credit Liability A/c

The profit or loss on revaluation is then transferred to all partners' capital accounts in their old profit-sharing ratio.

Step 2: Adjust for Goodwill

The retiring partner is entitled to their share of the firm's goodwill. The remaining partners compensate them because they'll continue to benefit from the firm's reputation.

Treatment (as per NCERT):

Calculate the firm's total goodwill (agreed value).
Retiring partner's share = Total goodwill × Retiring partner's profit share.
The remaining partners debit their capital accounts in their gaining ratio (new ratio – old ratio) and credit the retiring partner's capital account.

Journal entry:

Remaining Partners' Capital A/c (individually)   Dr.
    To Retiring Partner's Capital A/c

Step 3: Transfer Reserves and Accumulated Profits

Any General Reserve, Profit & Loss A/c (credit balance), or accumulated profits belong to all partners. The retiring partner's share is transferred to their capital account.

Journal entry:

General Reserve A/c   Dr.
Profit & Loss A/c     Dr.
    To All Partners' Capital A/c (in old ratio)

Step 4: Settle the Retiring Partner's Account

After all adjustments, the retiring partner's capital account shows the final amount due. This is paid either in cash or transferred to a loan account if the firm can't pay immediately.

Journal entry:

Retiring Partner's Capital A/c   Dr.
    To Bank A/c (or Retiring Partner's Loan A/c)

The Capital Account Format (as per NCERT)

Here's how a retiring partner's capital account looks in the ledger:

Dr.	Retiring Partner's Capital Account	Cr.
Particulars	Amount (₹)	Particulars
To Revaluation A/c (loss)	xxx	By Balance b/d
To Goodwill A/c (if written off)	xxx	By Revaluation A/c (gain)
To Retiring Partner's Loan A/c	xxx	By General Reserve A/c
To Bank A/c (final payment)	xxx	By Profit & Loss A/c
		By Goodwill A/c (remaining partners)
		By Interest on Capital (if any)
Total	xxx	Total

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(a) P's share of profit ₹40,000 is adjusted by debiting the Profit and Loss Suspense Account → option (D).

(b) New profit-sharing ratio of Nita and Anita = 7 : 5 → option (B).

Part (a)

When a partner dies during the year, his share of the interim profit up to the date of death is credited to his Capital Account, with the debit going to the Profit and Loss Suspense Account (a temporary account carried till the year-end).

P's share = ₹80,000 × 4/8 = ₹40,000. …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 167 on this concept.

CBSE 2026Set 67/3/11 markMCQ
$Q. (a) Atul, Bajaj and Madan were partners in a firm sharing profits and losses in the ratio of 1 : 2 : 5. The partnership deed provides that interest on a partner's drawings shall be charged @ 18% per annum. During the year ended 31st March, 2025, Bajaj withdrew ₹ 7,000 at the end of each quarter. Interest on Bajaj's drawings will be : (A) ₹ 1,890 (B) ₹ 3,150 (C) ₹ 420 (D) ₹ 5,040$
(OR)
$(b) Damodar, Rao and Shridharan were partners in a firm sharing profits and losses in the ratio of 3 : 1 : 1. Their fixed capitals were ₹ 4,00,000; ₹ 3,00,000 and ₹ 2,00,000 respectively. Interest on capital is allowed at the rate of 6% per annum. Journal entry for allowing interest on Rao's capital will be : (A) Profit & Loss Appropriation A/c Dr. — Debit ₹ 18,000 | To Rao's Capital A/c — Credit ₹ 18,000 (B) Profit & Loss Appropriation A/c Dr. — Debit ₹ 18,000 | To Rao's Current A/c — Credit ₹ 18,000 (C) Interest on Capital A/c Dr. — Debit ₹ 18,000 | To Rao's Current A/c — Credit ₹ 18,000 (D) Interest on Capital A/c Dr. — Debit ₹ 18,000 | To Rao's Capital A/c — Credit ₹ 18,000$
›Reveal solutionSolution
Part (a): Interest on Bajaj's drawings = ₹1,890 (option A). Part (b): Interest on Rao's capital ₹18,000 debited to Interest on Capital A/c and credited to Rao's Current A/c (option C).

Part (a)

When a fixed amount is withdrawn at equal intervals, interest on drawings is found by the average period method.
$Interest on Drawings = Total Drawings \times Rate \times (Average Period \div 12)$
Working Note

Total drawings = 7,000 × 4 = ₹28,000.

Withdrawal at the end of each quarter: first drawing (30 Jun) has 9 months to run; last drawing (31 Mar) has 0 months. Average period = (9 + 0) ÷ 2 = 4.5 months. …
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CBSE 2026Set 67/3/11 markMCQ
$Q. Divya and Bholi were partners in a firm sharing profits and losses in the ratio of 3 : 1. On 1st April, 2024, their fixed capitals were ₹ 8,00,000 and ₹ 6,00,000 respectively. On 30th September, 2024, Bholi introduced ₹ 50,000 as additional capital. Partnership deed provided that interest on capital will be allowed @ 12% p.a. Interest on Bholi's capital for the year ended 31st March, 2025 was : (A) ₹ 78,000 (B) ₹ 75,000 (C) ₹ 72,000 (D) ₹ 3,000$
›Reveal solutionSolution
The interest on Bholi's capital for the year ended 31st March, 2025, is ₹75,000.

In a partnership firm, interest on capital is an allowance provided to partners for contributing capital to the business. It is typically calculated at a specified rate on the opening capital balance for the entire accounting period. However, if a partner introduces additional capital during the year, interest is calculated on this additional amount only for the period it remained in the business. This ensures fairness, as partners are compensated for the exact duration their capital was employed by the firm.

Interest on capital is considered an appropriation of profits, not a charge against profits. This means it is allowed only if there are sufficient profits; if profits are less than the total interest on capital, the interest is allowed only to the extent of profits, distributed in the ratio of capital. If there are losses, no interest on capital is allowed.

To calculate Bholi's interest on capital, we need to consider her initial capital and the additional capital introduced, along with the respective periods for which each amount was outstanding.

Solution

The interest on Bholi's capital for the year ended 31st March, 2025 is calculated as follows:

Interest on Initial Capital:

Bholi's initial fixed capital on 1st April, 2024, was ₹6,00,000. This capital remained in the business for the entire financial year (12 months).

Interest = ₹6,00,000 $\times$ 12% $\times$ (12/12) = ₹72,000

Interest on Additional Capital:

Bholi introduced additional capital of ₹50,000 on 30th September, 2024. This means the additional capital was available to the firm from 1st October, 2024, until the end of the financial year, 31st March, 2025. This period is 6 months (October, November, December, January, February, March).

Interest = ₹50,000 $\times$ 12% $\times$ (6/12) = ₹3,000

Total Interest on Bholi's Capital:

Total interest on Bholi's capital for the year is the sum of interest on her initial capital and interest on her additional capital.

Total Interest = ₹72,000 + ₹3,000 = ₹75,000 …
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CBSE 2026Set 67/4/11 markMCQ
$Q. Ankur and Angad were partners in a firm sharing profits and losses in the ratio of 8 : 7. On 1st July, 2024, Angad advanced a loan of ₹ 8,00,000 to the firm. There is no partnership deed. Angad demands interest on loan @ 10% p.a. On 31st March, 2025, the amount of interest on loan due to Angad will be : (A) ₹ 36,000 (B) ₹ 48,000 (C) ₹ 80,000 (D) ₹ 60,000$
›Reveal solutionSolution
When there is no partnership deed, interest on a partner's loan is allowed at 6% per annum as per the Indian Partnership Act, 1932. For Angad's loan of ₹8,00,000 for 9 months, the interest due is ₹36,000.

In partnership accounting, the absence of a partnership deed is a critical factor. When partners do not have a written agreement, or if the existing deed is silent on a particular matter, the provisions of the Indian Partnership Act, 1932, automatically apply. This Act serves as a default framework to ensure fairness and prevent disputes.

One of the key provisions of this Act, specifically Section 13(d), addresses interest on a partner's loan to the firm. It states that if a partner has advanced a loan to the firm, they are entitled to receive interest on that loan at a rate of 6% per annum. This is a statutory right and overrides any personal demands made by a partner, such as Angad's demand for 10% interest in this case.

Important

When there is no partnership deed, or the deed is silent, the Indian Partnership Act, 1932, applies. As per Section 13(d) of this Act, a partner is entitled to interest on a loan advanced to the firm at 6% per annum.

It is also crucial to understand that interest on a partner's loan is considered a charge against profits, not an appropriation of profits. This means it must be paid whether the firm makes a profit or incurs a loss. It is treated as an expense of the business, similar to interest paid on a loan from an external party, and is debited to the Profit & Loss Account.

Working Notes

Applicable Rate of Interest on Loan:

Since there is no partnership deed, the provisions of the Indian Partnership Act, 1932, apply. As per Section 13(d) of the Act, interest on a partner's loan is allowed at 6% per annum.

Watch out

Angad's demand for 10% p.a. interest is not applicable in the absence of a partnership deed explicitly stating this rate. The statutory rate of 6% p.a. must be followed.

Period for which Interest is Due:

Angad advanced the loan on 1st July, 2024. The accounting period ends on 31st March, 2025.

The period for which interest is due is from 1st July, 2024, to 31st March, 2025.

This duration covers July, August, September, October, November, December, January, February, and March.

Number of months = 9 months.

Calculation of Interest on Angad's Loan:

Loan Amount = ₹8,00,000

Rate of Interest = 6% p.a. (as per Indian Partnership Act, 1932)

Period = 9 months

Interest on Loan = Loan Amount $\times$ Rate $\times$ Period

Interest on Loan = ₹8,00,000 $\times \frac{6}{100} \times \frac{9}{12}$

Interest on Loan = ₹48,000 $\times \frac{9}{12}$

Interest on Loan = ₹4,000 $\times 9$

Interest on Loan = ₹36,000 …
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CBSE 2026Set 67/4/11 markMCQ
$Q. Anita and Priyal were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April, 2024, their capital accounts showed balances of ₹ 3,00,000 and ₹ 4,00,000 respectively. The partnership deed provided for interest on capital @ 8% p.a. The firm earned a profit of ₹ 28,000 for the year ended 31st March, 2025. Interest on capital allowed to Anita and Priyal was : (A) Anita ₹ 24,000, Priyal ₹ 32,000 (B) Anita ₹ 16,000, Priyal ₹ 12,000 (C) Anita ₹ 12,000, Priyal ₹ 16,000 (D) Anita ₹ 16,800, Priyal ₹ 11,200$
›Reveal solutionSolution
When the available profit is less than the total interest on capital due, the interest on capital is restricted to the available profit and distributed among partners in the ratio of their individual interest entitlements. For Anita and Priyal, the interest on capital allowed will be ₹12,000 and ₹16,000 respectively.

In partnership accounting, the treatment of interest on capital is a crucial concept, especially when the firm's profit is insufficient to cover the full amount of interest. Interest on capital is generally considered an appropriation of profit, not a charge against profit. This means it is paid only if there are profits, and only to the extent of available profits.

Here's the rule:

If the partnership deed provides for interest on capital, but it does not explicitly state that interest on capital is a charge against profits (meaning it must be paid even if it results in a loss), then it is treated as an appropriation. In such cases, if the total amount of interest on capital due to all partners exceeds the net profit available for appropriation, the interest on capital is restricted to the available profit. This available profit is then distributed among the partners in the ratio of their individual interest on capital entitlements.

Let's apply this concept to the given problem.

Working Notes

Calculation of Anita's full Interest on Capital:

Anita's Capital = ₹3,00,000

Interest Rate = 8% p.a.

Full Interest on Capital for Anita = ₹3,00,000 $\times$ 8/100 = ₹24,000

Calculation of Priyal's full Interest on Capital:

Priyal's Capital = ₹4,00,000

Interest Rate = 8% p.a.

Full Interest on Capital for Priyal = ₹4,00,000 $\times$ 8/100 = ₹32,000

Total full Interest on Capital:

Total full Interest on Capital = Anita's Interest + Priyal's Interest

Total full Interest on Capital = ₹24,000 + ₹32,000 = ₹56,000

Comparison with Available Profit:

Firm's Profit for the year = ₹28,000

Total full Interest on Capital = ₹56,000

Since the firm's profit (₹28,000) is less than the total full interest on capital (₹56,000), the interest on capital will be restricted to the available profit of ₹28,000.

Watch out

A common mistake is to simply pay the full interest on capital, which would result in a loss for the firm. Interest on capital is an appropriation, not a charge, unless the deed explicitly states otherwise. Therefore, it cannot exceed the available profit.

Ratio for distributing restricted Interest on Capital: …
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CBSE 2026Set 67/5/11 markMCQ
$Q. Munna and Sonu were partners in a firm sharing profits and losses in the ratio of 4 : 1. Their fixed capitals were ₹ 40,00,000 and ₹ 30,00,000 respectively. During the year ended 31st March, 2025, Munna withdrew ₹ 50,000 for personal use. Interest on drawings was to be charged @ 6% p.a. The journal entry for charging interest on Munna’s drawings will be : (A) Interest on Drawings A/c Dr. — Debit ₹ 1,500 | To Munna’s Capital A/c — Credit ₹ 1,500 (B) Munna’s Capital A/c Dr. — Debit ₹ 1,500 | To Interest on Drawings A/c — Credit ₹ 1,500 (C) Interest on Drawings A/c Dr. — Debit ₹ 1,500 | To Munna’s Current A/c — Credit ₹ 1,500 (D) Munna’s Current A/c Dr. — Debit ₹ 1,500 | To Interest on Drawings A/c — Credit ₹ 1,500$
›Reveal solutionSolution
Munna's Current A/c Dr. ₹1,500 | To Interest on Drawings A/c Cr. ₹1,500 — the correct entry is (D).

Concept: Interest on Drawings in a Partnership

When a partner withdraws money for personal use, the partnership charges interest on those drawings to compensate the firm for the loss of capital employed. This interest is an appropriation of profit (not a charge against profit like interest on a loan), meaning it reduces the partner's share of distributable profit.

Accounting Treatment

The entry for charging interest on drawings involves two steps conceptually, though in practice we often combine them:

Interest on Drawings Account is credited (it is an income to the firm, increasing the pool available for appropriation).

The partner's account is debited (the partner owes this amount to the firm; it reduces his claim).

Because the firm maintains fixed capital accounts (capitals are ₹40,00,000 and ₹30,00,000 and remain unchanged), all adjustments for interest, salary, drawings, and profit shares flow through the Current Accounts of the partners. The fixed capital method keeps the Capital Account static; the Current Account is the working account that absorbs all operational adjustments.

Thus the journal entry is:

Partner's Current A/c Dr.

To Interest on Drawings A/c

This debits the partner's Current Account (reducing his balance or increasing his debit balance) and credits Interest on Drawings, which will later be transferred to the Profit & Loss Appropriation Account on the credit side, increasing distributable profit.

Watch out

A common mistake is to debit "Interest on Drawings A/c" thinking it is an expense. Interest on drawings is not an expense; it is an appropriation item (a recovery from the partner). The Interest on Drawings Account is credited, not debited.

Solution

Working Note 1: Calculation of Interest on Drawings

Munna withdrew ₹50,000 during the year ended 31st March, 2025. The question does not specify the date(s) of withdrawal, so we apply the average period method: interest is calculated for an average period of 6 months (half the year).
$\text{Interest on Drawings} = \text{Drawings} \times \frac{\text{Rate}}{100} \times \frac{\text{Time (months)}}{12}$ $= 50{,}000 \times \frac{6}{100} \times \frac{6}{12} = 50{,}000 \times 0.06 \times 0.5 = ₹1{,}500$

Journal Entry for Charging Interest on Munna's Drawings

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) | …
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CBSE 2026Set MARCH1 markMCQ
$Q. The capital proportion of A, B and C is 1:2:3 respectively. The divisible profit is ₹ 1,20,000. What will be the amount of profit of C?$
(a) 60,000
(b) 40,000
(c) 20,000
(d) 50,000
›Reveal solutionSolution

C's share of the 1,20,000 divisible profit in the 1 : 2 : 3 ratio is 60,000, so the answer is (a).

Total of the ratio = 1 + 2 + 3 = 6 parts.

Partner Ratio Share of 1,20,000
A 1/6 20,000
B 2/6 40,000

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CBSE 2026Set MARCH1 markMCQ
$Q. When only old profit-loss sharing ratio is given, gaining ratio of remaining partners will be _____.$
(a) 1 : 1
(b) Old ratio
(c) Capital ratio
(d) Can not be calculated
›Reveal solutionSolution

With only the old ratio available, the gaining ratio of the remaining partners is the old ratio, so the answer is (b).

Gaining ratio = new ratio minus old ratio. If the new ratio is not specified, the assumption is that the continuing partners take over the retiring/deceased partner's share in the s …

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CBSE 2026Set MARCH1 mark
$Q. What is gain ratio?$
›Reveal solutionSolution

Gain ratio = New ratio minus Old ratio; it is the proportion in which continuing partners take over the outgoing partner's share.

When a partner retires or dies, the share of profit released by that partner is taken up by the remaining partners. The proportion in which they acquire this share is called the gain (or gaining) ratio.

Gain ratio = New profit-sharing ratio - Old profit-sharing ratio

…

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CBSE 2026Set MARCH1 mark
$Q. In the case of death of a partner, the amount due to the deceased partner is transferred to his ______ account.$
›Reveal solutionSolution

On the death of a partner, the amount due is transferred to the Deceased Partner's Executor's Account.

When a partner dies, his Capital Account is credited with his capital, his share of accumulated profits/reserves, revaluation profit, share of goodwill, interest on capital and his share of profit up to the date of death, and debited with drawings and any losses. The resulting balance (the amount due) is then transferred out of his Capital Account:

Journal Entry
Deceased Partner's Capital A/c Dr.

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CBSE 2026Set MARCH1 markMCQ
$Q. A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. If C retires, the New Profit Sharing Ratio between A and B will be :$
(a) a) 3 : 2
(b) b) 5 : 3
(c) c) 5 : 2
(d) d) 1 : 1
›Reveal solutionSolution

Without any fresh agreement, the remaining partners keep their old mutual ratio, so the new ratio of A and B is 5 : 3 - option (b).

A, B and C shared profits 5 : 3 : 2. On C's retirement, C's share (2/10) is taken over by A and B. When nothing else is stated, the remaining partners share future profits in their existing relative proportion, i.e. 5 : 3.

…

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CBSE 2026Set MARCH1 mark
$Q. Profit or loss on revaluation is transferred to all partners' capital accounts in case of retirement of a partner. [State True/False]$
›Reveal solutionSolution

The statement is True - revaluation profit/loss goes to all partners in the old ratio on retirement.

When a partner retires, assets and liabilities are revalued so that the retiring partner gets the benefit or bears the burden of changes that occurred while he was a partner. The profit or loss shown by the Revaluation Account therefore relates to the period during which the retiring partner was present, and it is distributed among all partners (old + retiring) in their …

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CBSE 2026Set ANNUAL1 markMCQ
$Q. Seema, Madhu and Shweta are partners in the ratio of 2 1/3 : 3 1/3 : 4 1/3 in a firm. Shweta retired from the firm. Gaining ratio will be A) 7 : 13 B) 7 : 10 C) 10 : 13 D) 13 : 7$
›Reveal solutionSolution

After converting the mixed numbers, the old ratio is 7 : 10 : 13; on Shweta's retirement the gaining ratio of Seema and Madhu is their old ratio 7 : 10 — option (B).

First convert the profit-sharing ratio:

2 1/3 : 3 1/3 : 4 1/3 = 7/3 : 10/3 : 13/3

Multiplying each by 3 = 7 : 10 : 13 (Seema : Madhu : Shweta).

…

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Partner	Ratio	Share of 1,20,000
A	1/6	20,000
B	2/6	40,000

Part (a)

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