To calculate the deceased partner’s share of profit payable up to the date of death, which ratio should be identified first?

Correct answer: Profit-sharing ratio

The deceased partner’s share of profit up to the date of death is calculated on the basis of the partner’s profit-sharing ratio. Once this ratio is identified, the profit for the relevant period can be allocated to the deceased partner. Stock value, bank balance and cash balance may be relevant to other accounting adjustments, but they do not determine the partner’s share of profit. Exam tip: Always identify the profit-sharing ratio before allocating profit among partners.