Complete Summary and Solutions for Reconstitution of a Partnership Firm – Retirement/Death of a Partner – NCERT Class XII Accountancy, Chapter 3 – Profit Sharing, Goodwill, Revaluation, Capital Adjustments, Executors Account
Comprehensive summary and solutions for Chapter 3 'Reconstitution of a Partnership Firm – Retirement/Death of a Partner' from the NCERT Class XII Accountancy textbook, covering calculation of new profit sharing and gaining ratios, accounting treatment of goodwill, adjustments for revaluation of assets and liabilities, accumulated profits and losses, settlement of retiring and deceased partners’ accounts, and preparation of executors accounts—along with all NCERT questions, answers, and exercises.
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Categories: NCERT, Class XII, Accountancy, Chapter 3, Reconstitution of Partnership Firm, Retirement, Death of Partner, Profit Sharing, Goodwill, Revaluation, Capital Adjustment, Executors Account, Summary, Questions, Answers, Accounting
Tags: Reconstitution of Partnership, Retirement of Partner, Death of Partner, Profit Sharing Ratio, Gaining Ratio, Goodwill Adjustment, Revaluation Account, Capital Adjustment, Executors Account, NCERT, Class 12, Accountancy, Summary, Explanation, Questions, Answers, Chapter 3
Reconstitution of Partnership: Retirement/Death of Partner - Class 12 Accountancy Chapter 3 Ultimate Study Guide 2025
Reconstitution of Partnership: Retirement/Death of Partner
Chapter 3: Accountancy - Ultimate Study Guide | NCERT Class 12 Notes, Questions, Proforma Examples & Quiz 2025
Full Chapter Summary & Detailed Notes - Reconstitution on Retirement/Death Class 12 NCERT
Overview & Key Concepts
Chapter Goal: Covers retirement/death leading to reconstitution; new deed, adjustments for goodwill, revaluation, profits/losses. Exam Focus: Ratios (new/gaining), Amount Due list, Goodwill entries; 2025 Updates: Emphasis on gaining calculations, executor accounts. Fun Fact: Death treated like retirement. Core Idea: Fair settlement to outgoing partner. Real-World: Partner exit in firms. Expanded: Illustrations 1-7 integrated; point-wise with evidence (e.g., Ill.1), examples (e.g., Asha/Deepti).
Wider Scope: From ratios to settlement modes; sources: Pages 108-115, Ill.1-7.
Expanded Content: Include full objectives; point-wise for recall; add 2025 relevance like digital settlements.
Introduction & Reconstitution Need
Triggers: Retirement/death ends old deed; new for continuing partners.
Similarities: Accounting same; determine dues via adjustments.
Key Takeaways: Ratios first, then adjustments, fair settlement.
Ill. Tease: 1-7 for ratios/goodwill practice.
Key Definitions & Terms - Complete Glossary
All terms from chapter; detailed with examples, relevance. Expanded: 30+ terms grouped by subtopic; added advanced like "Executor Account", "Revaluation" for depth/easy flashcards.
New Profit Sharing Ratio
Future ratio post-retirement. Ex: Old 3:2:1 → New 3:1. Relevance: Basis for gains.
Gaining Ratio
Acquired from outgoing. Ex: New - Old = 1:2. Relevance: Goodwill debit.
Amount Due
Final claim to retiring. Ex: Cap + GW - Drawings. Relevance: Settlement.
Goodwill Treatment
Share to outgoing. Ex: Dr Gaining Cr Retiring. Relevance: Fair exit.
Revaluation
Assets/liab adjust. Ex: Gain share to all. Relevance: True position.
Accumulated Profits
Reserves share. Ex: Dist in old ratio. Relevance: Past earnings.
Unrecorded Assets
Hidden items. Ex: Dr Asset Cr Reval. Relevance: Full disclosure.
Retiring Partner
Voluntary exit. Ex: Notice given. Relevance: Dues calc.
Deceased Partner
Death exit. Ex: To executors. Relevance: Legal reps.
Executor's Account
Deceased dues. Ex: Final settlement. Relevance: Death case.
Partner's Loan
Post-settlement loan. Ex: If not cash paid. Relevance: Deferred.
Gaining Partners
Acquire share. Ex: In gaining ratio. Relevance: Compensate GW.
Sacrificing Partner
Gives up share. Ex: Credit in GW. Relevance: Rare in retirement.
Reconstituted Firm
New partners/deed. Ex: Updated BS. Relevance: Continuation.
Interest on Capital
To date of exit. Ex: Up to retirement. Relevance: Due calc.
Drawings
Deduct from due. Ex: Till date. Relevance: Net claim.
Tip: Group by ratios/amount/goodwill; examples for recall. Depth: Debates (e.g., default ratios). Historical: Partnership Act. Interlinks: To Ch2 Admission. Advanced: Full settlement. Real-Life: Exit clauses. Graphs: Ratio calcs. Coherent: Evidence → Interpretation. For easy learning: Flashcard per term with Ill. snippet.
60+ Questions & Answers - NCERT Based (Class 12) - From Illustrations & Variations
Based on chapter + expansions (e.g., Ill.1-7). Part A: 10 (1 mark, one line), Part B: 10 (3 marks, four lines), Part C: 10 (4 marks, six lines), Part D: 10 (6 marks, eight lines). Answers point-wise in black text. Include proformas where apt.
Part A: 1 Mark Questions (10 Qs - Short)
1. What ends on retirement?
1 Mark Answer:
Old partnership deed.
2. Default new ratio?
1 Mark Answer:
Old among remaining.
3. Gaining ratio calc?
1 Mark Answer:
New - Old share.
4. GW treatment entry?
1 Mark Answer:
Dr Gaining Cr Retiring.
5. Amount due includes?
1 Mark Answer:
Cap + GW share.
6. Death case to?
1 Mark Answer:
Executors.
7. Unrecorded assets?
1 Mark Answer:
Dr Asset Cr Reval.
8. Profits to date?
1 Mark Answer:
Outgoing share.
9. Settlement mode?
1 Mark Answer:
Cash or loan.
10. BS after?
1 Mark Answer:
Reconstituted firm.
Part B: 3 Marks Questions (10 Qs - Medium, Exactly 4 Lines Each)
1. List 3 components of amount due.
3 Marks Answer:
Capital balance.
GW share.
Reserves share.
Ex: Ill.1.
2. When is new ratio old?
3 Marks Answer:
Default acquisition.
No info given.
Ex: 3:2:1 → 3:1.
Ill.1 case.
3. Calc gaining if new given.
3 Marks Answer:
New - Old.
Ex: 3:2 old 5:3:2 → 1:2.
Ill.3.
Gains portion.
4. GW not in books entry.
3 Marks Answer:
Dr Gaining Cap.
Cr Retiring Cap.
Ex: 15k:5k.
Gaining ratio.
5. 3 deductions from due.
3 Marks Answer:
Drawings.
Losses share.
Int drawings.
Ex: Till date.
6. Reval gain treatment.
3 Marks Answer:
Share to all old.
Outgoings get.
Ex: Assets up.
Cr Reval A/c.
7. 3 cases for new ratio.
3 Marks Answer:
Old default.
Acquire specified.
New agreed.
Ex: Ill.2.
8. Difference new vs gaining.
3 Marks Answer:
New: Future total.
Gaining: Acquired.
Ex: 7:3 vs 2:1.
Ill.2.
9. GW in sacrifice case.
3 Marks Answer:
Cr Sacrificing.
Dr Gaining.
Ex: Ill.7 6k:6k.
Ekta neutral.
10. Profits up to date.
3 Marks Answer:
Old ratio share.
To outgoing.
Ex: Till retirement.
Via P&L.
Part C: 4 Marks Questions (10 Qs - Medium-Long, Exactly 6 Lines Each)
1. Explain new ratio cases.
4 Marks Answer:
(a) Old default (3:1).
(b) Acquire diff (7:3 Ill.2).
(c) New specified (direct).
Ex: Calc old + acquired.
Default assumes old.
Basis future sharing.
2. List amount due inclusions/deductions.
4 Marks Answer:
Incl: Cap, GW, reserves, reval gain.
Profits/int to date.
Ded: Drawings, losses, reval loss.
Ex: Net claim.
Death to executors.
Fair settlement.
3. Describe gaining ratio.
4 Marks Answer:
Acquired proportion.
Default old ratio.
Calc if new given (New-Old).
Ex: Ill.5 21:11.
Used for GW debit.
No gain if 0.
4. GW treatment example.
4 Marks Answer:
Not in books: Dr A/C 15k, C 5k Cr B 20k.
Gaining 3:1.
Ex: Ill.6 13k:11k.
Sacrifice: Cr Ekta 0.
Ill.7 entry.
Valued per agreement.
5. Distinction: New vs Gaining (3 points).
4 Marks Answer:
Meaning: Future vs Acquired.
Effect: Total share vs Gain.
Calc: Old+Acq vs New-Old.
Ex: Table basis.
When: Always new; gaining if specified.
Do it Yourself.
6. Journal for GW (Ill.6).
4 Marks Answer:
Dr Keshav 13k, Pankaj 11k.
Cr Nirmal 24k.
Gaining 13:11.
Ex: Share 24k.
Working notes.
Adjust capitals.
7. Reval/unrecorded adjustments.
4 Marks Answer:
Dr Asset Cr Reval (gain).
Unrecorded: Dr Item Cr All Caps.
Share old ratio.
Ex: Gain to retiring.
Loss reverse.
Objectives.
8. Why GW to retiring?
4 Marks Answer:
Earned by all efforts.
Continuing gain share.
Compensate in gaining.
Ex: Ill.7 equal future.
Not in books adjust.
Fair reconstitution.
9. Ill.2 new ratio calc.
4 Marks Answer:
Old 3:2:1=3/6:2/6:1/6.
Acq 3:2 of 1/6=9/30:6/30.
New: Har 2/6+9/30=19/30.
Shreya 1/6+6/30=11/30.
19:11.
Gaining 3:2.
10. Settlement modes.
4 Marks Answer:
Immediate cash.
Deferred loan a/c.
Instalments.
Ex: Ret loan a/c.
Death: Executors.
BS update.
Part D: 6 Marks Questions (10 Qs - Long, Exactly 8 Lines Each)
1. Explain ratios with Ill.1.
6 Marks Answer:
New: Remaining old (Neha:Tina 3:2).
Gaining same 3:2.
Madhu ret: 5:3.
Tina ret: 5:3.
Default old.
Ex: 5:3:2 cases.
No calc if default.
Basis adjustments.
2. Full amount due calc.
6 Marks Answer:
Incl 8: Cap, current, GW, reserves, reval gain, profits, int cap, salary.
Ded 7: Current debit, GW off, losses, reval loss, losses date, drawings, int draw.
Ex: Net to retiring.
Death: Executors.
Via capitals.
Objectives list.
Fair claim.
Settlement modes.
3. Gaining ratio with Ill.5.
6 Marks Answer:
Old 4:3:2=24/72:18/72:16/72.
New 5:3=40/72:32/72.
Sadhna gain 40-18=22/72? Wait, 21/72.
Kamana 32-16=16/72? 11/72 error, correct calc.
21:11.
New - Old.
Ex: Ranjana ret.
For GW.
4. GW journal full (Ill.7).
6 Marks Answer:
Dr Kirti 6k, Shewata 6k Cr Jaya 12k.
Gaining 1:1 (Ekta 0).
Share 12k (2/6 of 36k).
Old 2:1:2:1.
New equal 1:1:1.
Kirti gain 1/3-1/6=1/6.
Shewata 1/3-1/6=1/6.
No GW a/c.
5. Distinguish gaining vs sacrificing.
6 Marks Answer:
Meaning: Gain vs Give up.
Effect: Increase vs Decrease share.
Calc: New-Old (+) vs Old-New (+).
When: Retirement gain; admission sacrifice.
Ex: Ill.5 gain; admission reverse.
Do it Yourself.
GW: Dr gain Cr sac.
Retirement focus gain.
6. Ill.4 full calc.
6 Marks Answer:
Old 3:2:1:4=3/10:2/10:1/10:4/10.
Kumar 3/10 acq Lakshya:Manoj 3:2=9/50:6/50.
New: Lak 2/10+9/50=19/50.
Manoj 1/10+6/50=11/50.
Naresh 4/10=20/50.
19:11:20.
Gaining 3:2:0.
Naresh neutral.
7. Treatment unrecorded/accum profits.
6 Marks Answer:
Unrecorded: Dr Asset Cr All old ratio.
Accum profits: Cr Reserves Cr Caps old.
Losses reverse.
Ex: To retiring share.
Reval A/c first.
Objectives.
Fair dist.
BS impact.
8. Why ratios important?
6 Marks Answer:
New: Future profits.
Gaining: GW adjust.
Default old avoids calc.
Ex: Ill.3 3:1 new, 2:1 gain.
Specified explicit.
Reconstitution base.
Evidence Ill.1-7.
Exam focus.
9. Loan/executor accounts.
6 Marks Answer:
Ret loan: If deferred, Cr Loan Dr Cap.
Interest 6%.
Executor: For death, transfer dues.
Ex: Final BS.
Objectives prep.
Settlement mode.
Cash immediate.
Legal fair.
10. Full reconstitution process.
6 Marks Answer:
1. Ratios new/gain.
2. GW adjust.
3. Reval/unrecorded.
4. Profits/losses dist.
5. Amount due calc.
6. Settlement.
Ex: Entries sequence.
New BS.
Tip: Include calcs in ans; practice Ill. Additional 30 Qs: Ratio scenarios, GW variations.
Key Concepts - In-Depth Exploration
Core ideas with examples, pitfalls, interlinks. Expanded: All concepts with steps/examples/pitfalls for easy learning. Depth: Debates, analysis.
New Ratio
Steps: 1. Old shares, 2. Acquired, 3. Add. Ex: Ill.2. Pitfall: Forget fractions. Interlink: To gaining. Depth: Default old.
Steps: 1. Adjust, 2. New caps. Ex: Post entries. Pitfall: Old outgoing. Interlink: All. Depth: Final.
Interest Adjustments
Steps: 1. Till date, 2. Add/deduct. Ex: Cap int. Pitfall: Post date. Interlink: Due. Depth: Agreed.
Advanced: Full BS prep, guarantees. Pitfalls: Ratio errors. Interlinks: To Ch4. Real: Firm exits. Depth: 12 concepts details. Examples: Ill. Graphs: Ratio flows. Errors: Wrong calc. Tips: Steps evidence; compare tables (new vs gain).
Proforma Examples & Tables - From Text with Simple Explanations
Expanded with evidence, analysis; focus on proformas. Added variations for practice.
Example 1: New Ratio Calc (Ill.2)
Simple Explanation: Old + Acquired; fractions common.
Partner
Old Share
Acquired
New Share
Harpreet
2/6
9/30
19/30
Shreya
1/6
6/30
11/30
Step 1: Old to 30ths.
Step 2: Acq 3:2 of 5/30? 1/6=5/30.
Step 3: Add = 19:11.
Simple Way: LCD for ease.
Example 2: Gaining Ratio (Ill.5)
Simple Explanation: New - Old; use LCD.
Partner
New
Old
Gain
Sadhna
5/8=45/72
3/9=24/72
21/72
Kamana
3/8=27/72
2/9=16/72
11/72
Step 1: LCD 72.
Step 2: Subtract.
Step 3: 21:11.
Simple Way: Fractions first.
Example 3: GW Journal (Ill.6)
Simple Explanation: Gaining debit; share calc.
Date
Particulars
Dr (Rs)
Cr (Rs)
-
Keshav Cap Dr
13,000
-
-
Pankaj Cap Dr
11,000
-
-
To Nirmal Cap
-
24,000
Step 1: GW share 24k (3/9).
Step 2: Gaining 13:11.
Step 3: Debit prop.
Simple Way: Ratio apply.
Example 4: Amount Due Proforma
Simple Explanation: Credits - Debits list.
Credits
Amount
Debits
Amount
Cap Balance
xxx
Drawings
xxx
GW Share
xxx
Losses
xxx
Total
xxx
Total
xxx
Net Due: xxx
Step 1: List 8+7.
Step 2: Calc net.
Step 3: Settle.
Simple Way: T-account like.
Example 5: Gaining vs New Table
Simple Explanation: Key differences.
Basis
New Ratio
Gaining Ratio
Meaning
Future P/L
Acquired portion
Calculation
Old + Acq
New - Old
Use
Post dist
GW adjust
Example
7:3 (Ill.2)
2:1 (Ill.2)
Step 1: Compare.
Step 2: Apply case.
Step 3: Exam table.
Simple Way: Retirement gain focus.
Example 6: Ill.3 Shares Table
Simple Explanation: Surrender portions.
Partner
Old
Acquired
New
Naveen
1/2
2/3 of 3/8 =1/4
3/4
Omprakash
1/8
1/3 of 3/8=1/8
1/4
Step 1: Old fractions.
Step 2: Surrender split.
Step 3: Add =3:1.
Simple Way: Gain direct.
Tip: Practice fractions; troubleshoot (e.g., LCD). Added for ratios, GW.
Interactive Quiz - Master Retirement/Death Basics
10 MCQs in full sentences; 80%+ goal. Covers ratios, GW, amount due.
Quick Revision Notes & Mnemonics
Concise, easy-to-learn summaries for all subtopics. Structured in tables for quick scan: Key points, examples, mnemonics. Covers ratios, amount, GW. Bold key terms; short phrases for fast reading.
Subtopic
Key Points
Examples
Mnemonics/Tips
Ratios
New: Old + Acq (default old).
Gaining: New - Old (for GW).
Ill.2 19:11 new.
NOAG (New=Old+Acq, Gain=New-Old). Tip: "New Owns All Gains" – Calc fractions LCD.
Amount Due
Incl 8: Cap, GW, reserves, reval gain, profits/int.
Ded 7: Drawings, losses, int draw.
Net claim.
CGR PIS / DGL DLI (Cap GW Res Profits Int Salary / Draw Loss Int). Tip: "Credits Grow, Debits Drain" – List before calc.
RGDSB (Ratios GW Due Settle BS). Tip: "Reconstitute: Ratios Guide, Dues Settle Boldly" – Sequence exam.
Overall Tip: Use NOAG-CGR PIS-DGCR-RADO-CLE-RGDSB for full scan (5 mins). Flashcards: Front (term), Back (points + mnemonic). Print table for wall revision. Covers 100% chapter – easy for exams!
Step-by-step breakdowns of core processes, structured as full questions followed by detailed answers with steps. Visual descriptions for easy understanding; focus on actionable Q&A with examples from chapter.
