Question

State whether the following statements are true or false :

Retiring partner’s share in profit up to the date of his retirement will be debited to profit and loss suspense account.

Answer 1

True

Explanation: The retiring partner is entitled to his share of profits or losses 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. Profit and Loss Suspense Account is opened if any partner retires during the middle of the year as against the usual case of retirement at the year end.