{"id":4285,"date":"2026-07-06T14:09:03","date_gmt":"2026-07-06T08:39:03","guid":{"rendered":"https:\/\/mymockmate.com\/notes\/?p=4285"},"modified":"2026-07-06T14:09:56","modified_gmt":"2026-07-06T08:39:56","slug":"ncert-class-12-accountancy-retirement-death-of-a-partner-solutions","status":"publish","type":"post","link":"https:\/\/mymockmate.com\/notes\/ncert-class-12-accountancy-retirement-death-of-a-partner-solutions\/","title":{"rendered":"NCERT Class 12 Accountancy Retirement\/Death of a Partner Solutions"},"content":{"rendered":"<div class=\"mymoc-top mymoc-entity-placement\" id=\"mymoc-2106399603\"><div id=\"mymoc-1787586373\"><a href=\"https:\/\/amzn.to\/440rYSB\" aria-label=\"ssd\"><img src=\"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/ssd.png\" alt=\"\" srcset=\"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/ssd.png 1303w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/ssd-300x50.png 300w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/ssd-1024x171.png 1024w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/ssd-768x128.png 768w\" sizes=\"(max-width: 1303px) 100vw, 1303px\" width=\"1303\" height=\"218\"><\/a><\/div><\/div>\n<h3 class=\"wp-block-heading\">Short Introduction<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">This chapter explains the accounting treatment when a partner retires or dies in a partnership firm. It covers calculation of the new profit sharing ratio, gaining ratio, goodwill adjustment, revaluation of assets and liabilities, distribution of reserves, settlement of the retiring or deceased partner&rsquo;s claim, and preparation of relevant accounts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Quick Information Box<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Chapter Name: Retirement\/Death of a Partner<\/li>\n\n\n\n<li>Class: 12<\/li>\n\n\n\n<li>Subject: Accountancy<\/li>\n\n\n\n<li>Main Topics: New Profit Sharing Ratio, Gaining Ratio, Goodwill, Revaluation, Reserves, Partner&rsquo;s Capital and Loan Accounts<\/li>\n\n\n\n<li>Important Accounts Prepared: Revaluation Account, Partners&rsquo; Capital Accounts, Retiring Partner&rsquo;s Loan Account, Deceased Partner&rsquo;s Executor&rsquo;s Account<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Concepts Used (Topics Covered)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Meaning of retirement and death of a partner<\/li>\n\n\n\n<li>Calculation of new profit sharing ratio<\/li>\n\n\n\n<li>Calculation of gaining ratio<\/li>\n\n\n\n<li>Treatment of goodwill<\/li>\n\n\n\n<li>Hidden goodwill<\/li>\n\n\n\n<li>Revaluation of assets and liabilities<\/li>\n\n\n\n<li>Distribution of accumulated profits and losses<\/li>\n\n\n\n<li>Adjustment of partner&rsquo;s capitals<\/li>\n\n\n\n<li>Settlement of retiring partner&rsquo;s amount<\/li>\n\n\n\n<li>Calculation of deceased partner&rsquo;s share of profit up to the date of death<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Important Formulas<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>New Share = Old Share + Acquired Share<\/li>\n\n\n\n<li>Gaining Share = New Share &minus; Old Share<\/li>\n\n\n\n<li>Share of Goodwill = Goodwill of Firm &times; Partner&rsquo;s Share<\/li>\n\n\n\n<li>Deceased Partner&rsquo;s Share of Profit = Last Year&rsquo;s Profit &times; Time Ratio &times; Partner&rsquo;s Share<\/li>\n\n\n\n<li>Average Profit = Total Profit of Past Years &divide; Number of Years<\/li>\n\n\n\n<li>Interest on Capital = Capital &times; Rate &times; Time &divide; 100<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Questions &amp; Step-by-Step Solutions<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">Q1. What are the different ways in which a partner can retire from the firm?<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">Solution<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A partner can retire from a partnership firm in the following ways:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Retirement by Mutual Agreement: All partners agree to the retirement of a partner according to the terms of the partnership deed.<\/li>\n\n\n\n<li>Retirement by Notice: In a partnership at will, a partner may retire by giving written notice to the other partners.<\/li>\n\n\n\n<li>Retirement by Expiry of Partnership Term: In a partnership for a fixed period, a partner may retire when the agreed period ends.<\/li>\n\n\n\n<li>Retirement under Special Circumstances: A partner may retire due to illness, old age, personal reasons, or as per a court order.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Final Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A partner can retire by mutual agreement, by notice, by expiry of the partnership term, or under special circumstances such as illness or court order.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q2. Write the various matters that need adjustment at the time of retirement of a partner.<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">Solution<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The following adjustments are required at the time of retirement of a partner:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>New Profit Sharing Ratio and Gaining Ratio: The remaining partners&rsquo; future profit sharing ratio is calculated, and the ratio in which they gain the retiring partner&rsquo;s share is determined.<\/li>\n\n\n\n<li>Goodwill Adjustment: The retiring partner is compensated for his share of goodwill by the gaining partners.<\/li>\n\n\n\n<li>Revaluation of Assets and Liabilities: Assets and liabilities are revalued to reflect their current market values.<\/li>\n\n\n\n<li>Unrecorded Assets and Liabilities: Any unrecorded assets or liabilities are brought into the books.<\/li>\n\n\n\n<li>Distribution of Reserves and Accumulated Losses: General reserves, profit and loss balance, and other accumulated items are transferred to partners&rsquo; capital accounts in the old ratio.<\/li>\n\n\n\n<li>Adjustment of Partner&rsquo;s Capitals: Remaining partners may adjust their capitals according to the new profit sharing ratio.<\/li>\n\n\n\n<li>Settlement of Retiring Partner&rsquo;s Claim: The amount due to the retiring partner is paid immediately or transferred to a loan account.<\/li>\n\n\n\n<li>Share of Profit up to Date of Retirement: The retiring partner is entitled to his share of profit up to the date of retirement.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Final Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The adjustments include goodwill, revaluation, reserves, unrecorded items, new profit sharing ratio, capital adjustment, settlement of claim, and share of profit up to retirement.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q3. Distinguish between Sacrificing Ratio and Gaining Ratio.<\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Basis<\/th><th>Sacrificing Ratio<\/th><th>Gaining Ratio<\/th><\/tr><\/thead><tbody><tr><td>Meaning<\/td><td>Ratio in which existing partners sacrifice their share of profit.<\/td><td>Ratio in which continuing partners gain the outgoing partner&rsquo;s share.<\/td><\/tr><tr><td>Effect on Share<\/td><td>Partner&rsquo;s profit share decreases.<\/td><td>Partner&rsquo;s profit share increases.<\/td><\/tr><tr><td>Formula<\/td><td>Old Share &minus; New Share<\/td><td>New Share &minus; Old Share<\/td><\/tr><tr><td>When Calculated<\/td><td>At the time of admission of a new partner.<\/td><td>At the time of retirement or death of a partner.<\/td><\/tr><tr><td>Compensation<\/td><td>New partner compensates sacrificing partners.<\/td><td>Gaining partners compensate the retiring\/deceased partner.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Final Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Sacrificing ratio is used during admission when partners give up a part of their share, while gaining ratio is used during retirement or death when continuing partners gain the outgoing partner&rsquo;s share.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q4. Why do firms revalue assets and reassess liabilities on retirement or death of a partner?<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">Solution<\/h3>\n\n\n\n<div class=\"internal-linking-related-contents\"><a href=\"https:\/\/mymockmate.com\/notes\/relations-and-functions-exercise-1-1-solutions-class-12\/\" class=\"template-2\"><span class=\"cta\">Related Topic to Read more<\/span><span class=\"postTitle\">Relations and Functions Exercise 1.1 Solutions Class 12<\/span><\/a><\/div><p class=\"wp-block-paragraph\">Firms revalue assets and reassess liabilities to ensure that the retiring or deceased partner receives a fair settlement. The reasons are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fair Valuation: Assets may appreciate or depreciate, and liabilities may change in value over time.<\/li>\n\n\n\n<li>Correct Capital Balance: Revaluation ensures that the capital accounts reflect the current worth of the firm.<\/li>\n\n\n\n<li>Equitable Settlement: The outgoing partner should receive his rightful share in the increase or decrease in the value of assets and liabilities.<\/li>\n\n\n\n<li>True Financial Position: It presents the correct financial position of the reconstituted firm after retirement or death.<\/li>\n\n\n\n<li>Adjustment of Unrecorded Items: Any unrecorded assets or liabilities are recognized before settlement.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Final Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Revaluation is done to determine the current value of assets and liabilities, ensure fair settlement to the outgoing partner, and present the true financial position of the reconstituted firm.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q5. Explain the treatment of goodwill at the time of retirement of a partner.<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">Solution<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">At the time of retirement, the retiring partner is entitled to his share of goodwill because goodwill has been built by the efforts of all partners.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Treatment of Goodwill<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">1. When Goodwill Does Not Appear in the Books<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The retiring partner&rsquo;s share of goodwill is adjusted through the capital accounts of the gaining partners.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Journal Entry<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">2. When Goodwill Already Appears in the Books<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The existing goodwill is first written off among all partners in the old profit sharing ratio. Then the retiring partner&rsquo;s share of goodwill is adjusted through the gaining partners&rsquo; capital accounts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Hidden Goodwill<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If the retiring partner is paid more than the balance due in his capital account after adjustments, the excess amount is treated as his share of goodwill.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Important Point<\/h3>\n\n\n\n<div class=\"internal-linking-related-contents\"><a href=\"https:\/\/mymockmate.com\/notes\/relations-and-functions-exercise-1-2-solutions-class-12\/\" class=\"template-2\"><span class=\"cta\">Related Topic to Read more<\/span><span class=\"postTitle\">Relations and Functions Exercise 1.2 Solutions Class 12<\/span><\/a><\/div><p class=\"wp-block-paragraph\">The gaining partners compensate the retiring partner in their gaining ratio because they benefit from acquiring his share of future profits.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Final Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The retiring partner&rsquo;s share of goodwill is compensated by the gaining partners through their capital accounts, either by adjusting goodwill directly or by writing off existing goodwill first.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Common Mistakes<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Using old ratio instead of gaining ratio for goodwill adjustment.<\/li>\n\n\n\n<li>Ignoring revaluation before calculating retiring partner&rsquo;s claim.<\/li>\n\n\n\n<li>Not transferring reserves and accumulated losses to capital accounts.<\/li>\n\n\n\n<li>Incorrect calculation of deceased partner&rsquo;s share of profit for the intervening period.<\/li>\n\n\n\n<li>Forgetting to adjust capitals according to the new profit sharing ratio.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Exam Tips<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Always calculate new profit sharing ratio before goodwill adjustment.<\/li>\n\n\n\n<li>Use gaining ratio for compensating the retiring or deceased partner.<\/li>\n\n\n\n<li>Prepare Revaluation Account before Partners&rsquo; Capital Accounts.<\/li>\n\n\n\n<li>Transfer reserves and losses in the old profit sharing ratio.<\/li>\n\n\n\n<li>In death cases, remember to calculate share of profit up to the date of death.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Practice MCQs<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">1. The ratio in which continuing partners acquire the retiring partner&rsquo;s share is called:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>(a) Sacrificing ratio<\/li>\n\n\n\n<li>(b) Gaining ratio<\/li>\n\n\n\n<li>(c) Capital ratio<\/li>\n\n\n\n<li>(d) Debt-equity ratio<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">(b) Gaining ratio<\/p><div class=\"mymoc-middle mymoc-entity-placement\" id=\"mymoc-1845073433\"><div id=\"mymoc-4131071683\"><a href=\"https:\/\/amzn.to\/4xnw9oY\" aria-label=\"head-phones\"><img src=\"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/head-phones.png\" alt=\"\" srcset=\"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/head-phones.png 1301w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/head-phones-300x80.png 300w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/head-phones-1024x274.png 1024w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/head-phones-768x205.png 768w\" sizes=\"(max-width: 1301px) 100vw, 1301px\" width=\"1301\" height=\"348\"><\/a><\/div><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">2. At the time of retirement, reserves are transferred to partners&rsquo; capital accounts in:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>(a) New ratio<\/li>\n\n\n\n<li>(b) Gaining ratio<\/li>\n\n\n\n<li>(c) Old ratio<\/li>\n\n\n\n<li>(d) Equal ratio<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">(c) Old ratio<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. If goodwill already appears in the books, it is first:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>(a) Added to assets<\/li>\n\n\n\n<li>(b) Written off among all partners<\/li>\n\n\n\n<li>(c) Ignored<\/li>\n\n\n\n<li>(d) Transferred to reserve<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">(b) Written off among all partners<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FAQ Section<\/h3>\n\n\n\n<h3 class=\"wp-block-heading\">Q1. What is a new profit sharing ratio?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">It is the ratio in which the remaining partners share future profits after the retirement or death of a partner.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q2. Why is goodwill adjusted on retirement?<\/h3>\n\n\n\n<div class=\"internal-linking-related-contents\"><a href=\"https:\/\/mymockmate.com\/notes\/miscellaneous-exercise-solutions-class-12-relations-functions\/\" class=\"template-2\"><span class=\"cta\">Related Topic to Read more<\/span><span class=\"postTitle\">Miscellaneous Exercise Solutions Class 12 Relations Functions<\/span><\/a><\/div><p class=\"wp-block-paragraph\">Goodwill is adjusted because the retiring partner is entitled to his share of the goodwill earned by the firm.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q3. What is hidden goodwill?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Hidden goodwill is the excess amount paid to the retiring partner over the balance due in his capital account after adjustments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q4. How are reserves treated on retirement?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Reserves are transferred to all partners&rsquo; capital accounts in their old profit sharing ratio.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q5. What happens if the firm cannot pay the retiring partner immediately?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The amount due is transferred to the Retiring Partner&rsquo;s Loan Account and paid later with or without interest as agreed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For more Class 12 Accountancy solutions, chapter-wise notes, numericals, and exam-oriented study material, visit www.mymockmate.com and boost your board exam preparation.<\/p>\n<div class=\"mymoc-bottom mymoc-entity-placement\" id=\"mymoc-2753077181\"><div id=\"mymoc-1002367447\"><a href=\"https:\/\/amzn.to\/4ehRB6n\" aria-label=\"printers\"><img src=\"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/printers.png\" alt=\"\" srcset=\"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/printers.png 1303w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/printers-300x73.png 300w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/printers-1024x250.png 1024w, https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/printers-768x187.png 768w\" sizes=\"(max-width: 1303px) 100vw, 1303px\" width=\"1303\" height=\"318\"><\/a><\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>Short Introduction This chapter explains the accounting treatment when a partner retires or dies in a partnership firm. It covers calculation of the new profit&#8230;<\/p>\n","protected":false},"author":2,"featured_media":4286,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"postBodyCss":"","postBodyMargin":[],"postBodyPadding":[],"postBodyBackground":{"backgroundType":"classic","gradient":""},"footnotes":""},"categories":[7,3324],"tags":[3331,3270,3332,3272,3333,3204,3271,3269,3334,3335],"class_list":["post-4285","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-class-12","category-accountancy","tag-class-12-accountancy-solutions","tag-death-of-partner","tag-deceased-partner-account","tag-gaining-ratio","tag-goodwill-treatment","tag-new-profit-sharing-ratio","tag-partnership-reconstitution","tag-retirement-of-partner","tag-retiring-partner-loan-account","tag-revaluation-account"],"featured_image_src":"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/RetirementDeath-of-a-Partner-Solutions-Class-12-Accountancy.png","author_info":{"display_name":"Team Mymockmate (M)","author_link":"https:\/\/mymockmate.com\/notes\/author\/madhusa\/"},"_links":{"self":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/4285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/comments?post=4285"}],"version-history":[{"count":4,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/4285\/revisions"}],"predecessor-version":[{"id":6269,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/4285\/revisions\/6269"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/media\/4286"}],"wp:attachment":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/media?parent=4285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/categories?post=4285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/tags?post=4285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}