Question

Identify the correct sequence to be followed at the time of Retirement of a Partner :
(A) New Balance Sheet after Retirement
(B) Transferring balance to Retiring partner’s Loan Account
(C) Calculation Gaining/Sacrificing Ratio
(D) Partners’ Capital Account
(E) Preparation of Revaluation Account
Choose the correct answer from the options given below :

• A. (C), (D), (E), (A), (B)
• B. (C), (E), (D), (B), (A)
• C. (A), (B), (C), (D), (E)
• D. (C), (E), (B), (A), (D)

Hint:

"Every step in the retirement of a partner must be accurate to present the correct information"

Answer 1

The Correct Option is B

Steps in partner retirement:
Understanding the logical flow during a partner’s retirement, from initial accounting adjustments to final settlements
Step 1: Determining Gaining/Sacrificing Ratio (C): Gain or Sacrifice has to be measured before any form of revaluation has to be done.
Step 2: Preparation of Revaluation Account (E): Any revaluation profits, loss have to be ascertained first to determine accurate profit or loss
Revaluation is done

Step 3: Partners' Capital Account (D): Prepare the partners capital after transfer of revaluation and other profits.
Step 4: Transferring balance to Retiring partner’s Loan Account Balance due to retiring partner has to be transfered to loan account.
Transferring balance to Retiring partner’s Loan Account(B): The balance is transferred to loan account

Step 5: Create New Balance Sheet Post retirement(A): New Balance sheet is to be built by taking in consideration the updated numbers.