If a partnership revalues its assets upon the retirement of one of the partners, any resulting loss should be . . . . . .?
Select ONE answer:
- credited to the old partners’ capital accounts in the old profit sharing ratios.
- credited to the new partners” capital accounts in the new profit sharing ratios.
- debited to the old partners’ capital accounts in the old profit sharing ratios.
- debited to the new partners’ capital accounts in the new profit sharing ratios.
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 3
- Not correct
- Not correct
- Correct – Losses are always debited to the partners’s capital / current accounts whereas profits are always credited to them. The retiring partner bears a share of the loss because it arose while he / she was still a partner.
- Not correct
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