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FAQs on TS Grewal Solutions: Class 12 Accountancy Chapter 6
1. How do you correctly calculate the Gaining Ratio and the New Profit-Sharing Ratio for the remaining partners when a partner retires?
To solve problems as per the TS Grewal solutions, you must first calculate the Gaining Ratio, which is the proportion in which the remaining partners acquire the outgoing partner's share. The formula is: Gaining Ratio = New Ratio – Old Ratio. The New Profit-Sharing Ratio is the ratio in which the remaining partners will share future profits. If no specific ratio is given for acquiring the share, it is assumed they gain in their old profit-sharing ratio.
2. What is the step-by-step accounting treatment for Goodwill when a partner retires or dies, according to the CBSE 2025-26 syllabus?
The correct method for treating goodwill involves adjusting it through the partners' capital accounts, as per Accounting Standard 26. The steps are:
- Step 1: Calculate the outgoing partner's share of the firm's total goodwill.
- Step 2: Calculate the Gaining Ratio of the remaining partners.
- Step 3: Pass the adjustment journal entry by debiting the gaining partners' capital accounts in their gaining ratio and crediting the retiring/deceased partner's capital account. The entry is: Gaining Partners' Capital A/c (Dr.) to Retiring/Deceased Partner's Capital A/c (Cr.).
3. What are the necessary journal entries for the revaluation of assets and liabilities upon a partner's retirement?
When solving questions on a partner's retirement, a Revaluation Account is prepared to record changes in asset and liability values. The key entries are:
- For an increase in the value of assets or a decrease in liabilities (gain): Asset A/c (Dr.) / Liability A/c (Dr.) To Revaluation A/c (Cr.).
- For a decrease in the value of assets or an increase in liabilities (loss): Revaluation A/c (Dr.) To Asset A/c (Cr.) / To Liability A/c (Cr.).
4. How is the final amount due to a retiring partner calculated and settled in the books of the firm?
The final amount due to a retiring partner is determined by preparing their Capital Account. The calculation is as follows:
- Credits (Amount to be paid): Opening capital balance, share of reserves and accumulated profits, share of goodwill, share in revaluation profit, and interest on capital.
- Debits (Amount to be deducted): Drawings, interest on drawings, share of accumulated losses, and share in revaluation loss.
5. What is the correct accounting method for distributing accumulated profits, losses, and reserves at the time of a partner's retirement?
Accumulated profits, reserves (like General Reserve), and losses belong to all partners before retirement. Therefore, they must be distributed among all partners, including the retiring one, in their old profit-sharing ratio. The journal entry for distributing profits/reserves is: General Reserve A/c (Dr.) / Profit & Loss A/c (Dr.) To All Partners' Capital A/cs (Cr.). For losses, the entry is reversed.
6. Why is it necessary to revalue assets and liabilities on a partner's retirement, even if the partnership continues?
Revaluation is essential to ensure fairness to the outgoing partner. Over time, the book values of assets and liabilities may differ from their current market values. Revaluation adjusts these values so that the retiring or deceased partner receives their rightful share of any unrealised appreciation in assets (or bears their share of any decrease). It ensures that the true financial position of the firm is reflected at the time of reconstitution and prevents future disputes among the remaining partners.
7. What is the primary difference in the accounting procedure for settling the dues of a retiring partner versus a deceased partner?
The primary difference lies in who receives the final settlement amount and the calculation period.
- For a retiring partner, the amount due is paid directly to them or transferred to their loan account.
- For a deceased partner, the amount is transferred to their Executor's Account, as the legal heir is entitled to the funds.
8. Why is the retiring partner's share of goodwill adjusted through capital accounts instead of opening a Goodwill Account?
This method is followed to comply with Accounting Standard 26 (AS 26) on Intangible Assets. AS 26 states that internally generated goodwill should not be recognised as an asset in the books of accounts because it is not purchased for a consideration. Therefore, instead of raising and then writing off a Goodwill Account, an adjustment entry is passed. This entry effectively compensates the outgoing partner for their share of goodwill from the gaining partners without creating a fictitious asset on the balance sheet.
9. How do you solve for a deceased partner's share of profit up to the date of death?
A deceased partner's share of profit up to the date of death is an estimate, as accounts are not closed mid-year. There are two common methods for its calculation:
- On a Time Basis: The profit is estimated based on the previous year's profit, calculated proportionately for the period the partner was alive during the current year. (e.g., Previous Year's Profit x (Period/12) x Deceased Partner's Share).
- On a Turnover or Sales Basis: The profit is estimated based on the sales up to the date of death, using the previous year's profit-to-sales ratio.
10. What are the common mistakes students make when solving comprehensive problems on a partner's retirement?
When solving questions from TS Grewal on partner's retirement, students often make a few common errors:
- Forgetting to distribute existing goodwill appearing in the old Balance Sheet among all partners in the old ratio.
- Using the new profit-sharing ratio instead of the old ratio for distributing reserves and revaluation profit/loss.
- Incorrectly calculating the gaining ratio, especially when the new ratio is explicitly given.
- Making calculation errors in the final settlement of the retiring partner's capital account or loan account.

















