The correct answer is: B. P & L Adjustment a/c
When a partner retires, the decrease in the values of a liability is credited to the P & L Adjustment account. This is because the liability is being reduced, which means that the profit or loss of the business will also be reduced. The P & L Adjustment account is used to record any changes in the profit or loss of the business that are not directly related to the day-to-day operations of the business.
Option A is incorrect because the liability account is not credited when a partner retires. The liability account is debited when a liability is incurred, and it is credited when a liability is paid.
Option C is incorrect because the realisation account is used to record the sale of assets. When a partner retires, the assets of the business are not sold, so the realisation account is not used.
Option D is incorrect because the decrease in the values of a liability is not credited to any of the other options.