Question

Accumulated Profits/Losses & Reserves on the retirement of a partner are shared by the partners in their __________.

• A. Capital ratio
• B. New profit sharing ratio
• C. Old profit sharing ratio
• D. Gaining ratio

Answer 1

The correct option is C Old profit sharing ratio

The retiring partner is entitled to his share of profits or losses in old ratio that have arisen till the date of his retirement. Such shares are dispensed to the retiring partner by debiting the Profit & Loss Suspense Account and crediting the Retiring Partner's Capital Account.