Q1: 1. When a partner retires from a partnership firm, what happens to the retiring partner's share in the firm?

• A) It is transferred to the remaining partners
• B) It is returned to the retiring partner
• C) It is distributed among all partners
• D) It is dissolved

Q2: 2. In the event of a partner's death, how is the deceased partner's share in the firm settled?

• A) It is inherited by the deceased partner's family
• B) It is distributed among the remaining partners
• C) It is sold to an external party
• D) It is dissolved

Q3: 3. What is the process called when a new partner is introduced to replace a retiring partner?

• A) Dissolution
• B) Revaluation
• C) Reconstitution
• D) Settlement

Q4: 4. When a partner retires, how is the goodwill of the firm affected?

• A) It remains the same
• B) It decreases
• C) It increases
• D) It is written off

Q5: 5. In case of a partner's retirement, how is the retiring partner's capital adjusted?

• A) Increased
• B) Reduced
• C) Transferred to reserves
• D) Left unchanged

Q6: 6. What is the term used to describe the process of calculating the amount payable to a retiring partner?

• A) Liquidation
• B) Settlement
• C) Revaluation
• D) Computation

Q7: 7. When a partner retires, what factor determines the amount payable to the retiring partner?

• A) Original investment
• B) Profit-sharing ratio
• C) Age of the partner
• D) Market conditions

Q8: 8. How is the deceased partner's share of profit or loss handled in the final settlement?

• A) Ignored
• B) Distributed to the remaining partners
• C) Deducted from the firm's assets
• D) Paid to the legal heirs

Q9: 9. What document is used to record the retirement or death of a partner in a partnership firm?

• A) Balance sheet
• B) Income statement
• C) Partner's capital account
• D) Retirement deed

Q10: 10. In the case of a partner's retirement, how are the remaining partners affected financially?

• A) Increased profits
• B) Decreased profits
• C) No change in profits
• D) Losses

Q11: 11. How is the retiring partner compensated for their share in the firm?

• A) Cash payment
• B) Property transfer
• C) Promissory note
• D) Stocks and bonds

Q12: 12. When a partner retires, what effect does it have on the partnership deed?

• A) Nullified
• B) Amended
• C) Renewed
• D) Ignored

Q13: 13. How are the assets and liabilities revalued during the retirement of a partner?

• A) At market value
• B) At book value
• C) At historical cost
• D) At face value

Q14: 14. What is the primary purpose of revaluing assets and liabilities during a partner's retirement?

• A) To account for inflation
• B) To distribute profits
• C) To adjust capital accounts
• D) To reduce tax liabilities

Q15: 15. In the event of a partner's retirement, what step is taken to settle the partner's loan to the firm?

• A) Write off the loan
• B) Convert the loan to equity
• C) Pay off the loan
• D) Transfer the loan to another partner

Q16: 16. How is the retiring partner's share of goodwill calculated?

• A) Based on the partner's investment
• B) Based on the partner's age
• C) Based on the firm's performance
• D) Based on mutual agreement

Q17: 17. When a partner retires, how are the remaining partners' profit-sharing ratios affected?

• A) They remain unchanged
• B) They are adjusted based on the retiring partner's share
• C) They are reset to equal ratios
• D) They are dissolved

Q18: 18. How is the retiring partner's loan to the firm treated in the final settlement?

• A) Converted to equity
• B) Ignored
• C) Paid off
• D) Transferred to the remaining partners

Q19: 19. What legal document is used to formalize the retirement of a partner from a partnership firm?

• A) Deed of dissolution
• B) Retirement agreement
• C) Partnership deed
• D) Memorandum of association

Q20: 20. When a partner retires, what impact does it have on the firm's overall capital structure?

• A) No impact
• B) Increased capital
• C) Decreased capital
• D) Rebalanced capital

Q21: 21. In the case of a partner's retirement, how are the firm's assets and liabilities revalued?

• A) Assets at book value, liabilities at market value
• B) Assets at market value, liabilities at book value
• C) Assets and liabilities at historical cost
• D) Assets and liabilities at face value

Q22: 22. How does the retirement of a partner impact the firm's decision-making process?

• A) Increases decision-making efficiency
• B) Delays decision-making
• C) Reduces decision-making effectiveness
• D) No impact on decision-making

Q23: 23. When a partner retires, what is the responsibility of the remaining partners towards the retiring partner?

• A) Settle all debts
• B) Compensate for loss of income
• C) Pay off any outstanding loans
• D) Ensure a smooth transition

Q24: 24. How is the retiring partner's share of goodwill treated in the final settlement?

• A) Ignored
• B) Distributed among all partners
• C) Paid off
• D) Adjusted in the remaining partners' capital accounts

Q25: 25. What financial statement is prepared to reflect the reconstitution of a partnership firm due to a partner's retirement?

• A) Statement of profit and loss
• B) Statement of financial position
• C) Statement of cash flows
• D) Statement of changes in equity