Question :
Accumulated losses on the retirement of a partner are
Option 1:
credited to all Partners’ Capital Accounts in old profit-sharing ratio.
Option 2:
debited to all Partners’ Capital Accounts in the old profit-sharing ratio.
Option 3: credited to remaining Partners’ Capital Accounts in new profit-sharing ratio.
Option 4: credited to remaining Partners’ Capital Accounts in gaining ratio.
Correct Answer:
debited to all Partners’ Capital Accounts in the old profit-sharing ratio.
Solution : Answer = debited to all Partners’ Capital Accounts in the old profit-sharing ratio.
Accumulated losses on the retirement of a partner are debited to all Partners' Capital Accounts in the old profit-sharing ratio. This ensures that the losses are allocated among the partners based on their previous profit-sharing arrangement, maintaining fairness and transparency in the distribution of the financial impact of the retirement.
Hence, the correct option is 2.
