Question

State whether the following statement is true or false with reason.

Retiring partner is not entitled to share in general reserve and accumulated profit.

Options

• True

• False

Answer 1

This statement is false.

Explanation:

General reserve and accumulated profit are created out of past undistributed profit, such profits are the outcome of hard work of all the partners including retiring partners. Hence, retiring partner’s has the right to share general reserve and accumulated profit. He is, therefore, entitled to get a share in general reserve and accumulated profit.