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DK Goel Solutions Class 12 Accountancy Volume 1 Chapter 4

## Class 12 DK Goel Solutions Volume 1 Chapter 4 - Retirement or Death of a Partner

Retirement of a partner means the withdrawal of his or her partnership from a firm. This can be done with (i) prior notice by the partner, (ii) existing agreement of sorts, and (iii) all partners’ consent. The retirement or demise of a partner leads to the reconstitution of the agreement between existing partners. Students can Download DK Goel accountancy class 12 solutions Chapter 4 PDF for Perform well in Examination.

## DK Goel Solutions Class 12 Accountancy Volume 1 Chapter 4

The various problems that might arise due to the retirement of a partner might not be completely understood without solving problems on them. The solutions of DK Goel class 12 chapter 4 break down calculations of such problems into simple steps for an easy understanding of students.

### Accounting Treatments

On a partner’s retirement or death, existing partnership deeds need to be terminated in order to make way for a new settlement that deals with adjusting calculations, like changes in profit sharing ratios, amounts due to the retiring partner, etc. The solution of DK Goel class 12 chapter 4 PDF provides detailed steps to calculate such problems. Let us have a look at the important terms and what they mean.

### Profit-Sharing Ratio

As the name suggests, the profit-sharing ratio is the proportion in which partners of firms share profits and losses of their business. The ratio in which continuing partners will share future profits after one partner’s retirement or death is called a new profit-sharing ratio.

Question 1 of retirement or death of a partner class 12 DK Goel solutions demonstrates alternate situations of different partners retiring and how that will affect the existing Profit-Sharing Ratio.

The old profit-sharing ratio among X, Y, Z is known. In individual cases leading to X’s retirement, Y’s retirement, and Z’s retirement, since no new profit-sharing ratio of remaining partners is given, it is assumed they acquire shares in the old ratio.

### Gaining Ratio

On the retirement of a partner, the ratio in which shares of existing partners are divided among the remaining partners is known as the gaining ratio.

Question 2 in DK Goel Accountancy class 12 solutions chapter 4 PDF focuses on calculating new profit-sharing ratios of continuing partners, on the basis of a given data which can be understood to figure out the gaining ratio.

It is known how A, B, and C used to share profits. It is also said that on B’s retirement, his share is evenly divided between A and C, meaning the gaining ratio is 1:1. This information is used to calculate their individual share gain. Adding this data to their old individual shares gives the new shares, which are then used to calculate the new profit-sharing ratio between A and C.

Question 4 in DK Goel solutions class 12 chapter 4, on the other hand, presents a scenario where gaining ratio is directly given, and the new ratio needs to be calculated on the basis of that. The old ratio, in which A, B, and C used to share profits, is known. On C’s retirement, the ratio in which C’s shares will be divided between A and B is also known. Using the given gaining ratio, the shares that A and B will individually gain is calculated. Their new shares are added to their old individual shares to determine the new profit-sharing ratio between A and B.

### Adjusting Goodwill

Company goodwill comprises intangible assets like brand name, valuable employee associations, well-grounded consumer base, and so on.

A retiring partner is entitled to his share of company goodwill since he had contributed to it.

The remaining partners are liable to pay for the retiring partner’s share of goodwill according to their respective gaining ratio, as per existing agreements.

This concept has been employed to solve Question 3 in DK Goel Accountancy class 12 solutions chapter 4 PDF. The profit-sharing ratio among four partners A, B, C, and D is known. There is a goodwill amount during C’s retirement, which is also known. Here this company already possesses goodwill in its books.

For knowing the share of goodwill continuing partners are liable to pay C, at first gaining ratios of A, B, and D has been calculated. According to this calculated gaining ratio, C’s share of goodwill has been updated in their journal entry.

DK Goel Solutions Class 12 Chapter 4 provides insight into important conceptual problems on retirement or death of a partner in Accountancy. It enhances the critical thinking and problem-solving abilities of students to help them prepare better for their upcoming board exams where they are expected to be encountering sums based on similar concepts.

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1. What are some important concepts in chapter 4 from DK Goel Solutions Class 12 Retirement or Death of a Partner?

Ans. Some important concepts in Retirement or Death of a Partner Class 12 DK Goel Solutions involve various adjustment calculations that need to be done after the retirement of a partner, like:

Calculating Gaining Ratio and Net Profit Ratio.

Sharing Goodwill.

Revaluating Liabilities and Assets.

Distributing Profits and Losses.

Retiring Partner’s Due Amount.

2. What are the different changes caused due to a Retiring Partner and a Dead Partner?

Ans. Retirement of a partner takes place when a shareholder decides to exit a partnership firm on his own will and withdraw his company shares into his account. It can be done only at the end of an accounting year.

The death of a partner can happen at any time of a year, and in this case shares of the deceased partner are transferred to his executive’s loan account on his behalf.

3. Where can I find Solution of DK Goel Class 12 Chapter 4?

Ans. Retirement or Death of a Partner Class 12 DK Goel Solutions is formulated with expert guidance on concepts applied in sums which provide step-wise explanations to make Accountancy students for the preparation of board exams.

You can find DK Goel Solutions Class 12 Retirement or Death of a Partner on Vedantu, absolutely free.