What is the accounting effect of accumulated profits on the deceased partner’s capital account?

Correct answer: The account balance will increase

Accumulated profits, such as a general reserve or a credit balance in the Profit and Loss Account, are credited to the partners’ capital accounts in their old profit-sharing ratio. Therefore, the deceased partner’s capital account increases, and this amount forms part of the total amount payable to the deceased partner’s estate. Accumulated losses have the opposite effect and are debited. Exam tip: remember that profits are credited and losses are debited.