Steps involved in various accounting aspects of retirement or death of a partner -(A) Settlement of the amounts due to retired/deceased partner(B) Ascertainment of new profit sharing ratio and gaining ratio(C) Adjustment of capital, if required(D) Revaluation of assets and liabilitiesChoose the correct answer from the options given below:
- A\text{(B), (D), (C), (A)}
- B\text{(A), (C), (B), (D)}
- C\text{(B), (A), (D), (C)}
- D\text{(C), (B), (D), (A)}
Solution & Step-by-step Explanation
The logical sequence of carrying out accounting adjustments when a partner leaves or passes away is:(B) Ascertainment of new profit sharing ratio and gaining ratio: First step to know how the future profits will change and the distribution of goodwill.(D) Revaluation of assets and liabilities: Undertaken to establish the true contemporary value of assets/liabilities so profits/losses can be credited/debited to old partners.(C) Adjustment of capital, if required: Based on the new configuration/agreement.(A) Settlement of the amounts due to retired/deceased partner: Final closure step executed after computing all adjustments.Thus, the proper order is (B), (D), (C), (A).