Class 9 Accountancy Chapter 4 Reconstitution—Retirement / Death of a Partner: Complete Important Questions & Answers

Reconstitution of partnership when a partner retires or dies is a core pillar of Class 9 Accountancy. The NCERT chapter builds on partnership formation (Chapter 3) and tests three interconnected skills: (1) calculating gaining ratio—the proportions in which remaining partners acquire the retiring/deceased partner's share; (2) adjusting capital accounts for revaluation of assets, distribution of reserves, and goodwill; and (3) preparing executor's account (when death occurs) to settle the deceased partner's legal obligations. Board exams typically weight this chapter heavily: expect 1–2 questions in the 40-mark paper, ranging from 1-mark identification to 5-mark journal entry problems. The 2026–27 board pattern emphasizes application over rote learning—you must interpret scenarios (e.g., 'A retires and goodwill is recorded'), identify the correct formula, and journal the entries accurately. Many students stumble on gaining ratio calculation or miss the step where revaluation P&L is shared in old profit ratio. These 18 questions deliberately cover each pitfall, ensuring you recognize patterns instantly during the exam.

**Question 1:** When a partner retires, the gaining ratio is calculated as: (a) New profit ratio − Old profit ratio (b) Retiring partner's profit ratio ÷ New profit ratio (c) (New profit ratio − Old profit ratio) of remaining partners (d) Total profit ratio − Retiring partner's ratio **Answer:** (a) New profit ratio − Old profit ratio **Explanation:** Gaining ratio shows how much additional profit share each remaining partner gains. It's the difference between their new share (post-retirement) and old share (pre-retirement). --- **Question 2:** Revaluation of assets and liabilities at the time of a partner's retirement results in: (a) Debit to the Revaluation account; gain credited to all partners in old ratio (b) Debit to asset accounts; credit to liability accounts in new ratio (c) Debit to Revaluation account; gains/losses shared in old profit ratio (d) Direct debit to Retiring partner's Capital account **Answer:** (c) Debit to Revaluation account; gains/losses shared in old profit ratio **Explanation:** When assets are revalued, the Revaluation account is debited for losses and credited for gains. All partners (including the retiring one) share these gains/losses in their old profit ratio because they owned the assets pre-retirement. --- **Question 3:** Goodwill recorded at the time of a partner's death is: (a) Credited entirely to the Deceased partner's Capital account (b) Credited to all partners' Capital accounts in new profit ratio (c) Credited to all partners' Capital accounts in their old profit ratio (d) Written off equally among remaining partners **Answer:** (c) Credited to all partners' Capital accounts in their old profit ratio **Explanation:** Goodwill accumulated before death is an asset that belongs to all partners who contributed to building it. It's credited in old profit ratio (since the deceased partner's share is settled separately in the Executor's account). --- **Question 4:** An Executor's account is opened when: (a) A partner voluntarily retires from the firm (b) A partner dies and their legal heirs must be settled (c) Partnership deed is dissolved (d) New capital is introduced **Answer:** (b) A partner dies and their legal heirs must be settled **Explanation:** The Executor's account acts as a temporary account to record all amounts due to the deceased partner's estate—capital, share of profits, revaluation gains, goodwill, etc.—and tracks payments made to legal heirs. --- **Question 5:** If A and B share profits in ratio 3:2, and A retires, and B and C (new partner) agree to share future profits 2:1, the gaining ratio is: (a) A's old ratio (b) B's new ratio minus B's old ratio; C's new ratio minus C's old ratio (c) 2:1 (d) 3:5 **Answer:** (b) B's new ratio minus B's old ratio; C's new ratio minus C's old ratio **Explanation:** B's gaining ratio = 2/3 − 2/5 = 10/15 − 6/15 = 4/15. C is new, so C's gaining ratio = 1/3 − 0 = 1/3 = 5/15. Gaining ratio B:C = 4:5.

**Question 1:** Define gaining ratio and explain why it is calculated only for continuing partners, not the retiring partner. **Answer:** Gaining ratio is the proportion in which continuing partners acquire the retiring partner's profit share. It is calculated only for continuing partners because the retiring partner no longer has any interest in future profits—they are exiting the firm. Only the partners who remain stand to gain from the retired partner's share. --- **Question 2:** X, Y, and Z are partners sharing profits in ratio 2:2:1. Y retires. Calculate the gaining ratio of X and Z. **Answer:** Old profit ratio: X = 2/5, Y = 2/5, Z = 1/5 Let new ratio of X and Z be a:b. Since only X and Z continue, they acquire Y's share (2/5) in some proportion. Assuming they acquire in old ratio of X:Z = 2:1, New ratio: X = 2/5 + (2/5 × 2/3) = 2/5 + 4/15 = 6/15 + 4/15 = 10/15 = 2/3 Z = 1/5 + (2/5 × 1/3) = 1/5 + 2/15 = 3/15 + 2/15 = 5/15 = 1/3 Gaining ratio: X = 2/3 − 2/5 = 10/15 − 6/15 = 4/15; Z = 1/3 − 1/5 = 5/15 − 3/15 = 2/15 Gaining ratio X:Z = 4:2 = 2:1 --- **Question 3:** Why is revaluation of assets necessary when a partner retires? Give one example. **Answer:** Revaluation is necessary to reflect the true current market value of assets (instead of historical cost) so that the retiring partner receives a fair settlement based on the firm's true worth. For example, if a building was purchased for ₹1,00,000 five years ago but is now worth ₹1,50,000, revaluation records this ₹50,000 gain, which is shared fairly among all partners (including the retiring one) in their old profit ratio. --- **Question 4:** What is the difference between Revaluation account and Executor's account? **Answer:** Revaluation account is used whenever assets/liabilities are revalued (retirement or death); it shows gains/losses shared in old profit ratio. Executor's account is opened only when a partner dies; it is a temporary personal account for the deceased partner that collects all amounts due (capital, share of profits, revaluation gain, goodwill) and tracks payments to the estate/heirs. --- **Question 5:** A partner's Capital account before adjustment shows ₹50,000. After revaluation, a gain of ₹3,000 (share in old ratio) is credited to this account. What is the balance in the adjusted Capital account? **Answer:** Adjusted Capital account = ₹50,000 + ₹3,000 = ₹53,000. The gain from revaluation increases the partner's capital because the firm's assets are now worth more, and the partner's stake reflects this improvement.

**Question 1:** A and B are partners with capitals ₹60,000 and ₹40,000, sharing profits equally. They revalue assets and find a gain of ₹4,000. A retires. Calculate A's share of revaluation gain and the adjusted Capital account of A before settlement. **Solution:** Old profit ratio A:B = 1:1 Revaluation gain = ₹4,000 A's share of gain = 4,000 × 1/2 = ₹2,000 A's Capital account before retirement = 60,000 + 2,000 = ₹62,000 This ₹62,000 is what A is entitled to receive (before goodwill adjustment, if any). --- **Question 2:** P, Q, and R share profits in ratio 3:2:1. R dies. The partnership deed is silent on goodwill, but the partners value firm goodwill at ₹24,000. Record the journal entry to write off goodwill from the Executor's account in proportion to all partners' old shares. **Solution:** Old profit ratio P:Q:R = 3:2:1 (Total = 6) Goodwill = ₹24,000 P's share = 24,000 × 3/6 = ₹12,000 Q's share = 24,000 × 2/6 = ₹8,000 R's share = 24,000 × 1/6 = ₹4,000 **Journal Entry:** | Particulars | Debit | Credit | |---|---|---| | P's Capital account | 12,000 | | | Q's Capital account | 8,000 | | | R's Executor account | | 4,000 | | Goodwill account | | 24,000 | (Being goodwill written off in old profit ratio) --- **Question 3:** X, Y, and Z share profits 2:2:1. Y retires. No revaluation is done. Y's Capital = ₹40,000. Goodwill of the firm = ₹15,000. X and Z acquire Y's share in ratio 3:2. Calculate: (a) Gaining ratio (b) Y's entitlement before settlement **Solution:** (a) Old ratio X:Y:Z = 2:2:1 New ratio (X and Z): Acquiring Y's 2/5 share in ratio 3:2 X's new share = 2/5 + (2/5 × 3/5) = 2/5 + 6/25 = 10/25 + 6/25 = 16/25 Z's new share = 1/5 + (2/5 × 2/5) = 1/5 + 4/25 = 5/25 + 4/25 = 9/25 X's gaining ratio = 16/25 − 2/5 = 16/25 − 10/25 = 6/25 Z's gaining ratio = 9/25 − 1/5 = 9/25 − 5/25 = 4/25 Gaining ratio X:Z = 6:4 = 3:2 ✓ (b) Y's Capital account = ₹40,000 Y's share of goodwill = 15,000 × 2/5 = ₹6,000 Y's total entitlement = 40,000 + 6,000 = ₹46,000

**Question 1:** A, B, and C are partners sharing profits in ratio 3:2:1 with capitals ₹60,000, ₹40,000, and ₹20,000 respectively. C dies on 31 March 2024. On revaluation, assets increased by ₹6,000. Goodwill is valued at ₹18,000. Prepare Revaluation account, C's Executor's account, and adjusted Capital accounts of A and B. (Assume C's executor is paid in full.) **Solution:** **Step 1: Revaluation Account** | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | | Assets (gain on revaluation) | 6,000 | | A's Capital (3/6) | 3,000 | | | | | | B's Capital (2/6) | 2,000 | | | | | | C's Executor (1/6) | 1,000 | | | | 6,000 | | | 6,000 | **Step 2: Goodwill Account** Goodwill is written off from partners' capital in old ratio 3:2:1. | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | A's Capital | (3/6 × 18,000 = 9,000) | | | Goodwill | 18,000 | | B's Capital | (2/6 × 18,000 = 6,000) | | | | | | C's Executor | (1/6 × 18,000 = 3,000) | | | | | | | | 18,000 | | | 18,000 | **Step 3: Adjusted Capital Accounts (before settlement)** | | A | B | |---|---|---| | Opening Capital | 60,000 | 40,000 | | Revaluation gain | +3,000 | +2,000 | | Goodwill write-off | −9,000 | −6,000 | | Adjusted Capital | 54,000 | 36,000 | **Step 4: C's Executor's Account** | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | | Bank (settlement) | 24,000 | | C's Capital | 20,000 | | | | | | Revaluation gain | 1,000 | | | | | | Goodwill write-off | 3,000 | | | | 24,000 | | | 24,000 | C's Executor's Account shows C's total entitlement: ₹20,000 (capital) + ₹1,000 (revaluation share) + ₹3,000 (goodwill share) = ₹24,000, which is paid in full via bank. --- **Question 2:** P and Q share profits 2:1. P retires. On revaluation, liabilities decreased by ₹3,000 (a gain). Goodwill is valued at ₹12,000 but is not recorded in the books. P and Q agree that future goodwill will not appear in books. P's Capital before adjustment = ₹36,000. Q's Capital before adjustment = ₹18,000. Show all adjustments, and calculate P's settlement amount. **Solution:** **Step 1: Revaluation Account** Liability decrease (gain) = ₹3,000 P's share = 3,000 × 2/3 = ₹2,000 Q's share = 3,000 × 1/3 = ₹1,000 | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | | Liabilities | 3,000 | | P's Capital (2/3) | 2,000 | | | | | | Q's Capital (1/3) | 1,000 | | | | 3,000 | | | 3,000 | **Step 2: Goodwill (not recorded but credited to retiring partner)** Since goodwill is not to be recorded in books, P's share of goodwill is credited directly to P's Capital account (through Goodwill in the conceptual journal). P's goodwill share = 12,000 × 2/3 = ₹8,000 Q's goodwill share = 12,000 × 1/3 = ₹4,000 These are credited to their Capital accounts conceptually but not journalized (as per agreement). **Step 3: Adjusted Capital Accounts** | | P | Q | |---|---|---| | Opening Capital | 36,000 | 18,000 | | Revaluation gain | +2,000 | +1,000 | | Goodwill credit | +8,000 | +4,000 | | Adjusted Capital | 46,000 | 23,000 | **Step 4: P's Settlement** P receives: ₹46,000 (adjusted capital) The settlement can be made from firm's cash or Q's contribution. --- **Question 3:** M and N are partners sharing profits 3:2. M dies on 30 June 2024. Before death: M's Capital = ₹75,000, N's Capital = ₹50,000. Revaluation shows: land gain ₹5,000, stock loss ₹1,500. Goodwill = ₹20,000 (recorded on books). After M's death, N brings in her share of goodwill. Prepare Revaluation account, Goodwill adjustments, and M's Executor's account showing total due. **Solution:** **Step 1: Revaluation Account** Net revaluation gain = 5,000 − 1,500 = ₹3,500 M's share = 3,500 × 3/5 = ₹2,100 N's share = 3,500 × 2/5 = ₹1,400 | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | | Stock | 1,500 | | Land | 5,000 | | | | | | M's Capital (3/5) | 2,100 | | | | | | N's Capital (2/5) | 1,400 | | | | 1,500 | | | 6,500 | (Error check: 5,000 − 1,500 = 3,500 net gain; 2,100 + 1,400 = 3,500 ✓) **Step 2: Goodwill Already Recorded** Goodwill ₹20,000 exists on books. It is credited to partners in old ratio: M's credit = 20,000 × 3/5 = ₹12,000 N's credit = 20,000 × 2/5 = ₹8,000 | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | | (No debit) | | | Goodwill | 20,000 | | Goodwill | 20,000 | | | | | (Goodwill a/c is closed; credits go to capitals) Alternatively (cleaner journal): | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | M's Executor | 12,000 | | Goodwill | 20,000 | | N's Capital | 8,000 | | | | | | | 20,000 | | | 20,000 | **Step 3: M's Executor's Account** | Dr. | Particulars | Amount | | Cr. | Particulars | Amount | |---|---|---|---|---|---|---| | | Revaluation gain | 2,100 | | M's Capital | 75,000 | | | Goodwill share | 12,000 | | | | | | | 14,100 | | | 75,000 | | Balance (due to executor) | 89,100 | | | | | | | | 89,100 | | | 89,100 | **Total due to M's Executor:** ₹89,100 (Composition: Capital 75,000 + Revaluation gain 2,100 + Goodwill 12,000 = ₹89,100)

**Scenario:** Rajesh, Sanjay, and Tarun are partners in a consulting firm, sharing profits in ratio 4:3:2 (total = 9). Rajesh's Capital = ₹1,20,000, Sanjay's Capital = ₹90,000, Tarun's Capital = ₹60,000. On 31 March 2024, Sanjay dies suddenly. The partnership deed stipulates: (1) Goodwill is to be valued at 2 years' purchase of average net profit. Last three years' net profit: ₹45,000, ₹54,000, ₹51,000. (2) Assets are to be revalued: machines depreciate by 5% of their current book value (₹2,00,000), stock loses 10% (current book ₹50,000). (3) Goodwill, once recorded, is written off equally among all partners (including deceased) in old ratio. (4) Sanjay's executor is entitled to: capital + revaluation share + goodwill share + share of profit up to death. **Requirement:** Calculate Sanjay's total entitlement and identify which accounts will appear on the final settlement statement. **Guided Solution Steps:** **Step 1: Calculate Goodwill** Average net profit = (45,000 + 54,000 + 51,000) ÷ 3 = 1,50,000 ÷ 3 = ₹50,000 Goodwill at 2 years' purchase = 50,000 × 2 = ₹1,00,000 **Step 2: Calculate Revaluation Gain/Loss** Machines loss = 2,00,000 × 5% = ₹10,000 (loss) Stock loss = 50,000 × 10% = ₹5,000 (loss) Total loss = ₹15,000 (debit Revaluation account) Sanjay's share = 15,000 × 3/9 = ₹5,000 (loss, debited to Sanjay's Executor account) **Step 3: Goodwill Allocation** Sanjay's share of goodwill = 1,00,000 × 3/9 = ₹33,333 (credited to Executor account) **Step 4: Sanjay's Executor's Account Construction** | Debit Side | Amount | | Credit Side | Amount | |---|---|---|---|---| | Revaluation loss | 5,000 | | Opening Capital | 90,000 | | Balance (due to executor) | 118,333 | | Goodwill share | 33,333 | | | | | | | | | 123,333 | | | 123,333 | (Note: Profit share up to death would be calculated if the question provides the exact death date and monthly profit data.) **Step 5: Final Settlement Statement** Sanjay's Executor is entitled to: - Capital: ₹90,000 - Less: Revaluation loss: ₹5,000 - Plus: Goodwill: ₹33,333 - **Total: ₹1,18,333** (assuming no profit share mentioned; if profit share to date of death = X, add X) **Key Insights for Students:** 1. Goodwill is recorded at death; it is then shared in old profit ratio (because it was built pre-death by all partners). 2. Revaluation losses are debited to the Executor's account (reduce amount due). 3. The Executor's account temporarily holds all credits (capital, goodwill, profit share) and debits (revaluation loss, if any) until settlement. 4. The final balance is what the heirs receive from the firm.

At CBSETUTOR.ai, we recognize that Class 9 Accountancy demands both conceptual clarity and speed. Our AI tutor is purpose-built for the 2024–25 CBSE syllabus and practises Reconstitution problems using a proven spaced-repetition system. **Daily Drill Features:** 1. **Pattern Recognition:** Each day, your AI tutor assigns 2–3 Reconstitution scenarios (retirement, death, or mixed). You solve them under timed conditions (similar to board exams). The system detects which step you struggle with—e.g., if you always forget to allocate revaluation gain to the deceased partner, the tutor flags this and re-drills it the next day with a different scenario. 2. **Concept Locks:** Before drills, the AI ensures you've locked the concept. It poses quick checks: 'Explain why Revaluation account gains are shared in *old* profit ratio, not new.' If you answer correctly, you proceed; if not, the tutor explains and re-tests. 3. **Error Diagnosis:** When you submit a journal entry, the AI doesn't just mark it wrong—it shows you *where* you went wrong. For example: 'You debited Executor account for goodwill, but goodwill is a credit to the Executor (it increases the amount due).' 4. **Board-Style Mocks:** Weekly, the tutor delivers a full 5-mark problem identical to board patterns. You solve it, submit, and receive a detailed mark-by-mark breakdown. 5. **Doubt Clearing:** Real-time text-and-voice doubt sessions let you ask: 'Why is goodwill not recorded if the deed says it shouldn't be?' The AI tutor clarifies instantly and re-drills you on similar edge cases. Start a 3-day free trial at cbsetutor.ai to experience how our AI tutor can help you master Reconstitution and score 95+ in Class 9 Accountancy.

Before your final board exam or school test, tick off these must-know points: ✓ **Gaining Ratio Formula:** New profit ratio − Old profit ratio (for remaining partners only) ✓ **Revaluation Procedure:** Prepare Revaluation account → gains/losses shared in old profit ratio → credit/debit to all partners' capitals ✓ **Goodwill Recording:** If goodwill is recorded on books, it is credited to all partners (including retiring/deceased) in old ratio, then written off from remaining partners in new ratio (or not written off if kept on books). ✓ **Executor's Account Structure:** One side lists the deceased partner's capital, revaluation share, goodwill share, and profit share (credits); the other side lists any losses or payments made. The balance is what is due to the estate. ✓ **Key Journal Entries to Master:** - Revaluation account entries (debit losses, credit gains) - Goodwill recording/writing-off - Capital account adjustments - Bank payment to Executor ✓ **Common Pitfalls to Avoid:** - Forgetting to include the retiring/deceased partner in revaluation sharing - Calculating gaining ratio in the wrong order (new − old, not old − new) - Confusing Revaluation account with Executor's account - Forgetting that profit share up to date of death is also due to the executor ✓ **Calculation Drill:** Practice at least one full problem daily for the last week before exam. Time yourself: aim to complete a 5-mark problem in 8–10 minutes.