At the time of retirement of a partner, the existing profit and loss balance is transferred to which account? A. Realisation B. Revaluation C. Goodwill D. Existing partners capital

The correct answer is: A. Realisation

When a partner retires, the existing profit and loss balance is transferred to the realisation account. This account is used to record the sale of the retiring partner’s interest in the partnership. The proceeds from the sale are then distributed to the remaining partners in accordance with their profit-sharing ratios.

The other options are incorrect because:

• B. Revaluation account is used to record the revaluation of assets and liabilities when a partner retires.
• C. Goodwill account is used to record the goodwill that may arise when a partner retires.
• D. Existing partners capital account is used to record the capital of the remaining partners after the retirement of a partner.

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