Question

Objective type questions :
Answer in one sentence only.

How is amount due to a retiring partner settled?

Answer 1

The amount due to a retiring partner is assumed to be paid through loan if nothing is mentioned in the question regarding the mode of payment. The capital account of the retiring or the deceased partner is closed by transferring the balancing figure to the credit side of the Retiring/Deceased Partner’s Loan A/c. The Retiring/Deceased Partner’s Loan A/c will be shown on the Liabilities side of the New Balance Sheet (post retirement/death).