Book-Keeping and Accountancy · Ch 5 — Reconstitution of Partnership (Death of Partner)
Distinguishing Retirement of a Partner from Death of a Partner
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Distinguishing Retirement of a Partner from Death of a Partner
Retirement and death both end a partner's membership of the firm and trigger broadly similar adjustments — goodwill, revaluation, reserves, and settlement of the amount due — but the two events differ in several important respects that the Maharashtra HSC (MSBSHSE) syllabus tests as a distinct theory question in its own right.
| Basis | Retirement of a Partner | Death of a Partner |
|---|---|---|
| Nature of the event | Voluntary — the partner chooses to leave | Involuntary — occurs without notice |
| Timing | Usually takes effect at, or from, the close of an accounting year, after notice or as per the deed | Can occur on ANY date during the accounting year |
| Profit up to the date of exit | Not usually a separate calculation, since retirement is normally timed to the year-end | Must be specially estimated (time basis or turnover basis) through a Profit & Loss Suspense Account, since the year's actual profit is not yet known |
| Who receives the settlement | The retiring partner personally | The deceased partner's legal representative — the executor (or heirs) |
| Loan account (if balance carried forward) | Partner's Loan Account | Executor's Loan Account |
| Notice/consent required | Usually governed by the partnership deed, or Sections 32–33 of the Indian Partnership Act, 1932 | No notice possible; governed instead by Section 37 for the interest entitlement of the executor |