Question

State any two items of deduction that may have to be made from the amount payable to a retiring partner.

Hint:

Before finalizing the settlement amount for a retiring partner, ensure that all outstanding dues and liabilities are adjusted appropriately.

Answer 1

Two items of deduction that may have to be made from the amount payable to a retiring partner are:
1. Outstanding liabilities: Any liabilities or debts owed by the retiring partner to the firm are deducted.
2. Losses or damages caused: If the retiring partner is responsible for any loss or damage to the firm's assets, the compensation amount is deducted.