Final answer:
The retirement of a partner can indeed lead to a decrease in the other partners' capital accounts, as assets are used to pay out the retiring partner. This is true in a general partnership, where partners share liabilities and assets. However, in a limited liability partnership, personal assets are protected from business debts.
Step-by-step explanation:
The retirement of a partner by payment from partnership assets could indeed cause other partner's capital accounts to decrease. The statement is True. When a partner retires, and if the partnership agreement does not stipulate any reserve or other arrangement for this eventuality, the retiring partner's share of the capital must be returned to him or her. This withdrawal of assets reduces the overall capital within the partnership, which in turn may lead to a decrease in the remaining partners' capital accounts, especially if they have to utilize existing partnership assets to buy out the retiring partner's interest.
It's important to note that in a general partnership, partners are jointly responsible for the debts and obligations of the business; and the retirement of a partner can lead to the dissolution of the existing partnership agreement, necessitating a revaluation of the partnership and a redistribution of capital accounts among the remaining partners. In contrast, a limited liability partnership (LLP) provides protection to the partners' personal assets, limiting their exposure to the amount of their investment in the company.