Book- Keeping and Accountancy
STANDARD XII
Chapter 4. Reconstitution of Partnership (Retirement of Partner)
Page No. in book (183)
Answer in one sentence only :
1 What is
meent by Retirement of a Partner?
Ans. If the partner is retiring from partnership firm his share of
profit, upto the date of retirement capital, his share in other reserves of the
firm will be paid to him. Old partners will gain the profit and there will be
change in the profit sharing
ratio.
2 What is
Benefit Ratio?
Ans. The ratio in which the continuing
partners acquire the retirng partner's share is called gain/benefit ratio. It
is normally used to write off goodwill created or raide to the extent of
retiring partner's share only
3 What is New
Ratio?
Ans. The ratio in which the containing
partners decide to share the future Profit and losses is known as New Profit Sharing Ratio.
4 How is the
amount due to the retiring partner settled?
Ans. The amount due to retiring partner is
either paid off immediately or it is transferred to his loan account.
5 How is Gain
Ratio calculated?
Ans. Calculation of Gain Ratio:
Gain Ratio=
New Ratio - Old Ratio
6 Why is
retiring partner’s capital account credited with goodwill?
Ans. The retiring partner's capital account is
credited with his share of goodwill and the amount is debited to the remaining
partners' capital accounts in the ratio of their gain.