Option (B) is correct. On retirement or death of a partner, when there is a change in profit sharing ratio among the remaining partners, some partners may gain while others may sacrifice. The gaining partners must compensate both: (i) the retiring/deceased partner for acquiring their share, and (ii) the remaining partners who have sacrificed their share in the new ratio. This ensures fair distribution of goodwill and adjustment of capital accounts. The compensation is made through adjustment in capital accounts by debiting gaining partners and crediting sacrificing partners along with the retiring partner.