Book-Keeping and Accountancy · Class 12 Commerce
Ch 4Reconstitution of Partnership (Retirement of Partner) — Class 12 Book-Keeping and Accountancy, concept-first.
A partnership is not a permanent, unchanging arrangement — partners retire from a firm just as they once joined it, whether from old age, ill health, disagreement with the other partners, or simply the wish to withdraw from active business.
Key concepts
Hover a concept to preview it and jump to its most relevant Q&A.
Meaning of Retirement, New Ratio and Gaining Ratio
Retirement of a partner is a form of reconstitution in which an existing partner leaves the firm, with the consent of the others, while the remaining partners continue the business.
Most relevant Q&A
- What is meant by Retirement of a Partner? State the adjustments required at the time of a partner's retirement.Free
- Distinguish between Sacrificing Ratio and Gaining Ratio.Preview
- P, Q and R share profits and losses in the ratio 5:3:2. Q retires, and P and R decide to share the future profits of the firm in the ratio 3…Free
- A, B and C share profits and losses in the ratio 3:2:1. B retires, and A and C decide to share the future profits of the firm equally. Calcu…Free
- New Ratio (less) _________ = Gain ratioPreview
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Meaning of Retirement of a Partner
A partnership is not a permanent, unchanging arrangement — partners retire from a firm just as they once joined it, whether from old age, ill health, disagreement with the other partners, or simply th…
New Profit-Sharing Ratio and Gaining Ratio
When a partner retires, his share of future profits does not simply vanish — it is picked up by the continuing partners, in whatever proportion they agree upon (or, if nothing is agreed, in their own…
Sacrificing Ratio and Gaining Ratio — the Distinction
Students sometimes confuse the Sacrificing Ratio, met in the previous chapter on Admission of a Partner, with the Gaining Ratio of this chapter — the two describe opposite movements in a partner's sha…
Treatment of Goodwill on Retirement
A firm's goodwill — the value of the reputation it has built up over the years, letting it earn more than a similar new firm would from the same volume of business — does not disappear when a partner…
Revaluation of Assets and Liabilities on Retirement
By the date a partner retires, the book values of several assets and liabilities may no longer match their true current worth.
Accumulated Profits, Reserves and Losses on Retirement
A firm's Balance Sheet, just before a partner retires, may already carry items such as a General Reserve, a Reserve Fund, or a credit balance of the Profit and Loss Account — profits earned and set as…
Ascertaining and Settling the Amount Due to the Retiring Partner
Once goodwill, revaluation, and accumulated profits/reserves have all been adjusted through the Capital Accounts, the retiring partner's Capital Account shows a single final balance — the total amount…
Exercises
Sample & Board Papers
Sample papers and previous-year board questions for this subject.
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- Q1New Ratio (less) _________ = Gain ratioPreview
- Q2Ajay, Vijay and Sanjay were partners sharing profits and losses in the ratio of 3 : 3 : 2. Their Balance Sheet as on 31st March 2020 is as f…Preview
- Q3Write the word/phrase/term/ which can substitute of the following statement: The ratio which is obtained by deducting the Old Ratio from New…Preview
- Q4State whether the following statement is true or false with reason. Retiring partner is not entitled to share in general reserve and accumul…Preview
- Q5Given below is the Balance sheet of Amar, Akbar and Anthony who were sharing profits and losses equally: | Balance Sheet as on 31st March, 2…Preview
- Q6Retiring partner is entitled to share in Reserve Fundand Accumulated Profit. (a) Agree (b) DisagreePreview
- Q7The balance of the capital account of retired partner is transferred to his ______ account if it is not paid. (a) Loan (b) Personal (c) Curr…Preview
- Q8The balance sheet of Shivshakti Traders, Mumbai is as follows. Partners share profit and losses as 5:2:3. Balance Sheet as on 31 st March, 2…Preview
- Q9Retiring partner is called an outgoing partner. (a) Agree (b) DisagreePreview
- Q10Gain ratio is calculated at the time of admission of new partner. (a) Agree (b) DisagreePreview
- Q11Given below is a Balance Sheet of Aditya, Ajinkya and Arun, who were partners in a firm sharing profits and losses in the ratio 5 : 3 : 2. T…Preview
- Q12The profit or loss from revaluation on the retirement of a partner is shared by ______. (a) The remaining partners (b) All the partners (c)…Preview
- Q13Ramesh, Dinesh and Mahesh were partners sharing profits and losses in the ratio of 5 : 2 : 3. Their balance sheet as on 31st March 2020 was…Preview
- Q14Select the most appropriate alternative from the choices given below and rewrite the statement: X, Y and Z are partners sharing profits in t…Preview
- Q15Q. 3. OR The Balance Sheet of Mac, Paul and Sam is as follows: Balance Sheet as on 31st March, 2016 | Liabilities | Amount (₹) | Assets | Am…Preview
More questions
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- Q5P, Q and R share profits and losses in the ratio 5:3:2. Q retires, and P and R decide to share the future profits of the firm in the ratio 3…Free
- Q6A, B and C share profits and losses in the ratio 3:2:1. B retires, and A and C decide to share the future profits of the firm equally. Calcu…Free
- Q7X, Y and Z share profits and losses in the ratio 2:2:1. Y retires. The goodwill of the firm on the date of retirement is valued at ₹60,000,…Free
- Q8L, M and N are partners sharing profits and losses in the ratio 2:2:1. On N's retirement, it was agreed to revalue assets and liabilities as…Preview
- Q9D, E and F share profits and losses in the ratio 3:2:1. On F's retirement, their Balance Sheet showed a General Reserve of ₹30,000 and a cre…Preview
- Q10After all adjustments for goodwill, revaluation and reserves, the amount standing to the credit of Z's Capital Account, on his retirement, i…Preview
- Q11X retires from a firm on 1st April 2023. The amount due to him after all adjustments, ₹1,20,000, is left with the firm and is to be paid in…Preview
- Q12A, B and C are partners sharing profits and losses in the ratio 3:2:1. Their Balance Sheet as on 31st March 2024 was as follows: Balance She…Preview