If the annual profit is ₹2,40,000 and a partner dies 3 months after the beginning of the year, what will be the time-based profit assuming profit accrues evenly?

Correct answer: ₹60,000

Time-based profit = Annual profit × Months elapsed until death / 12. Therefore, ₹2,40,000 × 3/12 = ₹60,000. ₹80,000 would represent four months’ profit, so it is incorrect. In the exam, first form the ratio of elapsed months to 12 and multiply it by the annual profit.