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Reconstitution of Partnership : Retirement of a Partner — Chapter Summary

ICSE · Class 12 · Accountancy

Summary of Reconstitution of Partnership : Retirement of a Partner for ICSE Class 12 Accountancy. Part of the ICSE Class 12 Accountancy syllabus.

39 questions40 flashcards7 formulas & key relations5 concepts

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Overview

Retirement of a partner means to discontinue to be a partner in the firm. After retirement, the old partnership ends, but the firm continues with the remaining partners, so the firm is reconstituted. The retiring partner is called the outgoing partner. The chapter focuses on how profit-sharing chang

Key Concepts

A partner retires when he discontinues

A partner retires when he discontinues being a partner in the firm. Retirement may happen by consent of all partners, by express agreement, or in a pa

After retirement

After retirement, the old partnership ends and a new partnership arises among the remaining partners. The business continues, but the relationship amo

The continuing partners share profits

The continuing partners share profits in the new ratio. New share = Old share + Acquired gaining share.

The gaining ratio is the ratio

The gaining ratio is the ratio in which continuing partners acquire the share of the outgoing partner. Gaining ratio = New ratio - Old ratio.

Sacrificing ratio = Old ratio

Sacrificing ratio = Old ratio - New ratio. It applies at admission of a new partner, not at retirement.

Learning Objectives

  • Understand the meaning and legal modes of retirement of a partner.
  • Identify the effect of retirement on the partnership and the liability of the retiring partner.
  • Calculate the new profit sharing ratio and gaining ratio after retirement.
  • Adjust goodwill, including hidden or inferred goodwill, without raising a goodwill account in the books.
  • Prepare and use Revaluation Account for assets, liabilities, reserves, profits and losses.

Frequently Asked Questions

What are the important topics in Reconstitution of Partnership : Retirement of a Partner for ICSE Class 12 Accountancy?
Key topics in Reconstitution of Partnership : Retirement of a Partner include Meaning and Effect of Retirement, Goodwill on Retirement, Revaluation of Assets and Liabilities, Undistributed Profits, Losses, and Reserves. Study these first, then practise questions on each for the ICSE Class 12 board exam.
How should I revise Reconstitution of Partnership : Retirement of a Partner for the ICSE Class 12 board exam?
Learn the core ideas first, then work through the 39 practice questions on Reconstitution of Partnership : Retirement of a Partner. Revise definitions regularly and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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