Deceased Partner’s Share

Correct answer: A. 1/5

To find a partner’s share from a stated ratio, divide that partner’s ratio part by the sum of all ratio parts. The total of 5:3:2 is 5 + 3 + 2 = 10. C has 2 parts, so C’s share is 2/10. Reducing this fraction by dividing numerator and denominator by 2 gives 1/5. Therefore option A is correct. Option B is B’s share, because B has 3/10. Option D, 5/10, represents A’s share before simplification, not C’s share, while option C is unrelated to the given ratio. Retirement does not change the calculation of C’s old share; it only creates the need to settle that share and related goodwill.

Correct answer: A. The net amount payable to the deceased partner or their legal representative

A is correct. The amount due is the net balance payable after accounting for the deceased partner’s capital and other amounts due, such as their share of goodwill, reserves, revaluation profit and profit up to the date of death, and deducting any amounts owed by them.

Correct answer: B. The legal representative

When a partner dies, the amount due to that partner is calculated by considering the capital balance, share of goodwill, accumulated profits or losses, and profit earned up to the date of death, as applicable under the partnership agreement. The resulting amount is transferred to the deceased partner’s Executor’s Account or Legal Representative’s Account. It is therefore payable to the person legally authorised to represent the deceased partner’s estate, normally the legal representative. The remaining partners may continue the business, but they do not become the payee merely because they continue it. A bank and an accountant may assist with payment or records, but neither is entitled to the deceased partner’s share.

Correct answer: A. Share of goodwill

The amount due to a deceased partner includes the partner’s share of goodwill along with adjustments to the capital account. It may also include the share of revaluation profit or loss, accumulated profits and profit up to the date of death. Therefore, the options stating ‘only’ drawings, liabilities or sales are incorrect. Exam tip: While calculating the final claim, check goodwill, revaluation, reserves and profit up to the date of death.

Correct answer: B. The deceased partner’s legal representative

The deceased partner’s share of profit earned up to the date of death is credited to the account of the deceased partner’s legal representative or executor because it is an amount due to the deceased partner. It is not paid directly to the surviving or incoming partners. Exam tip: The profit share up to the date of death is transferred from the deceased partner’s capital or current account to the executor’s account.

Correct answer: A. To determine the amount payable to the deceased partner or the legal heir

The deceased partner’s share is calculated to determine the amount payable to the deceased partner’s legal heir or executor. This amount may include the partner’s capital, reserves, goodwill and share of profit up to the date of death, after necessary adjustments. Therefore, option A is correct; the other options are not purposes of this calculation. Exam tip: Remember to include the deceased partner’s share of profit up to the date of death.

Correct answer: A. Yes, after adjustments

The credit balance of the deceased partner’s Capital Account is included while determining the amount payable to him or her. However, the final amount also requires adjustments for goodwill, accumulated profits or losses, profit up to the date of death, drawings and other relevant items. Therefore, ₹1,00,000 will form part of the amount due after adjustments. Exam tip: The deceased partner’s claim is not limited to capital; include all applicable adjustments.

Correct answer: A. Credited to the deceased partner’s capital account

Accumulated profits and general reserve are distributed among the partners in their profit-sharing ratio. Therefore, the deceased partner’s share is credited to the deceased partner’s capital account and becomes part of the amount payable to the partner’s executor. Option B is incorrect because a debit is made for the deceased partner’s share of accumulated losses. Exam tip: credit the capital account for profits or reserves, and debit it for accumulated losses.

Correct answer: A. Executor's Loan Account

When the amount due to a deceased partner is not paid immediately, it may be transferred to the Executor's Loan Account. The amount remains a liability of the firm and is paid to the executor later. Sales, Purchases, and Stock Accounts are not used for recording this liability. Exam tip: Link an unpaid amount due to a deceased partner with the executor's loan account.

Correct answer: A. Because his share in the firm’s goodwill is part of the amount payable to him

Goodwill represents the firm’s reputation and earning capacity, to which the deceased partner contributed. Therefore, at reconstitution, the deceased partner’s share of goodwill is credited to the partner’s capital or current account, as provided by the partnership agreement, and becomes payable to the partner’s legal representative. It is not added because of any bank requirement, increase in stock, or universal tax rule. Exam tip: While calculating the amount due to a deceased partner, include the partner’s share of goodwill in the capital account settlement.

Correct answer: A. Up to the date of death

The deceased partner’s share of the current year’s profit is calculated only for the period from the beginning of the accounting year up to the date of death. The amount is usually estimated using past profits, time proportion, or sales. Therefore, the calculation is not extended to the end of the full accounting year. Exam tip: treat the date of death as the cut-off date for the profit calculation.

Correct answer: A. Yes

Any revaluation profit arising up to the date of death is distributed among the old partners in their profit-sharing ratio. Therefore, the deceased partner’s share is credited to the partner’s capital account and included in the final amount due. If there is a revaluation loss instead, the deceased partner’s share is deducted rather than added.

Correct answer: A. Loan Account

When the amount due to a deceased partner, including capital, profit and other adjustments, is not paid immediately, it is transferred to the deceased partner’s Loan Account. This represents a liability of the firm, not income or loss. Exam tip: an unpaid amount due to a deceased partner is recorded in the deceased partner’s Loan Account.

Correct answer: A. Future profit for the period after death

A deceased partner is entitled to a share of profit earned up to the date of death, but not to profits earned after that date. The partner’s capital, share of goodwill and share of accumulated profits are generally included in the amount due. Exam tip: distinguish between profit up to the date of death and profit earned after the date of death.

Correct answer: B. ₹1,00,000

The two given items are added: ₹80,000 + ₹20,000 = ₹1,00,000. Therefore, option B is correct. ₹90,000 would result from adding only ₹10,000, so it is incorrect. In such questions, remember to combine the capital amount and the partner’s share of goodwill.

Correct answer: A. Liability

The amount payable to a deceased partner represents an obligation of the firm. Therefore, until it is paid, it is treated as a liability, not as an asset, income or profit. Exam tip: an unpaid amount due to a partner is shown on the liabilities side of the firm’s balance sheet.

Correct answer: A. Yes, in the profit-sharing ratio

A reserve fund is generally an accumulated profit. On a partner’s death, it is distributed among all partners, including the deceased partner, in the old profit-sharing ratio. The deceased partner’s share is therefore included in the amount due to them. It does not depend on the firm earning a current profit, and it is not recorded in the Revaluation Account. Exam tip: Distribute accumulated profits or losses in the partners’ old profit-sharing ratio.

Correct answer: A. Legal representative

The amount payable to a deceased partner is determined after adjusting items such as capital, profit, goodwill and other relevant balances. This amount is payable to, and communicated to, the deceased partner’s legal representative or executor. A customer, supplier or bank manager has no claim over this amount. Exam tip: After a partner’s death, the amount due is generally transferred to the legal representative’s account.

Correct answer: A. Legal representative's

After a partner’s death, the amount due to the partner after adjusting the capital account, current account, goodwill and other relevant items is payable to the partner’s legal representative or executor. Therefore, the legal representative is entitled to receive ₹1,50,000. The bank and customers have no ownership claim over this amount. Exam tip: The amount due to a deceased partner is generally transferred to the executor’s or legal representative’s account.

Correct answer: A. It shows the deceased partner’s adjusted capital balance

The capital account shows the deceased partner’s capital balance, which is included in the amount payable after necessary adjustments such as profit or loss, reserves, goodwill and profit up to the date of death. Thus, it is an important basis of the calculation, although the amount due is not limited to the capital balance alone. Sales, purchases and closing stock relate to business transactions or assets, not directly to the deceased partner’s capital. Exam tip: While calculating the amount due, check the capital balance along with adjustments for goodwill, reserves and profit or loss up to the date of death.

Correct answer: A. Yes, according to the partner’s profit-sharing ratio

The deceased partner’s share in undistributed or accumulated profit existing up to the date of death is credited to the partner’s capital or current account and becomes part of the amount payable to the executor. This share is calculated according to the profit-sharing ratio; there is no general rule that only half is included or that the entire profit goes to the surviving partners. Exam tip: Add the deceased partner’s proportionate share of accumulated profit existing at the date of death to the deceased partner’s account.

Correct answer: C. ₹80,000

Total amount = capital ₹70,000 + share of reserve fund ₹10,000 = ₹80,000. Therefore, option C is correct. Option A includes only the capital and ignores the reserve fund share. Exam tip: While calculating the amount due to a deceased partner, include every adjustment specified in the question.

Correct answer: A. The liability is discharged

The amount due to the deceased partner, including the balance of the capital account and any adjustments for profit or other items, is payable to the executor. Once this amount is paid, the firm’s liability is discharged and no longer remains outstanding. Therefore, the liability does not remain unchanged after payment. Exam tip: distinguish between the amount transferred to the executor’s account and the subsequent payment that settles it.

Correct answer: A. Share of goodwill

The deceased partner’s share of goodwill is credited to the partner’s capital account, so it increases the total amount payable. Payment merely settles the amount already due, while drawings and the share of loss reduce it. Exam tip: Add credit items and subtract debit items while calculating the amount due.

Correct answer: A. Death of a partner

The deceased partner’s share is determined after the partner’s death. Adjustments relating to profit or loss up to the date of death, goodwill and revaluation are considered in settling the amount due. Admission and merger are different events, and a partner’s death does not necessarily mean dissolution of the firm. Exam tip: Associate the term ‘deceased partner’ directly with the event ‘death of a partner.’