Question

At the time of retirement of partner reserve appearing in balance sheet is distributed to ___________.

• A. all partners in their old ratio
• B. continuing partner in their new ratio
• C. continuing partner in their gain ratio
• D. all partners in their last agreed capital ratio

Answer 1

The correct option is A all partners in their old ratio

On retirement of a partner, it is required to revalue assets and liabilities just as in the case of admission of a partner. If there is revaluation profit, then such profit should bed distributed amongst the existing partners including the retiring partner at the existing ratio i.e., in old profit sharing ratio and if there is any loss on revaluation that is also to be distributed amongst existing partners in existing ratio. Also if any profit or reserves exist in balance sheet before retirement it should be distributed among all partners in their old profit sharing ratio.