What does the balance of a deceased partner's capital account generally represent?

Correct answer: His capital balance

A partner’s capital account records the capital introduced into the firm, together with later permanent adjustments such as the partner’s share of accumulated profits, reserves, revaluation profit or loss, and other agreed items. At the date of death, the resulting credit balance generally represents the capital amount standing to the deceased partner’s credit, before all other final claims are added. Thus option A is the best answer. It does not mean the entire profit of the firm; profit is distributed among partners according to the agreement. It is also not a bank loan, because a bank loan is an external liability, nor is it an expense, which is a charge against profit. The final amount due may additionally include goodwill, profit up to the date of death, and interest or salary if applicable.