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What is the main reason for recording the retirement procedure of a partner in the partnership deed?

Answer and explanation

Correct answer: To clarify settlement of the retiring partner

On retirement, the retiring partner's capital account, share in profits, settlement of goodwill and any amount due must be settled. Recording the retirement procedure in the deed specifies how these settlements will be made and reduces disputes. Options B, C and D concern other matters: C relates to admission of a new partner, B could be a separate clause but is not the primary purpose of a retirement clause, and D is unrelated. Exam tip: look for keywords such as 'settlement', 'capital', 'goodwill' or 'profit share' — they point to retirement provisions.

Related tags

RetirementPartnership DeedSettlementPartner RetirementPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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