Reconstitution of a Partnership Firm - Retirement/Death of a Partner
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Preview questions
1. What is the primary purpose of reconstituting a partnership firm?
To increase capital · To change the profit-sharing ratio · To accommodate a new partner · To settle accounts
2. Which of the following is NOT a method of valuing goodwill during the retirement of a partner?
Average profit method · Super profit method · Net asset method · Capitalization of assets method
3. When a partner retires, how is their share of goodwill generally treated?
Written off · Paid in cash · Transferred to the new partner · Recorded as a liability
4. In the case of a partner's death, what is the treatment of their share of profit until the date of death?
Transferred to the remaining partners · Paid to the legal heir · Ignored in the final accounts · Included in the goodwill calculation
5. What happens to the partnership deed upon the retirement of a partner?
It becomes void · It remains unchanged · It needs to be revised · It is automatically renewed
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