If the profit of the previous year was ₹1,92,000 and a partner died 5 months after the beginning of the financial year, what is the estimated profit up to the date of death on a time basis?

Correct answer: ₹80,000

On a time basis, estimated profit = previous year’s annual profit × the fraction of the year completed up to death. Therefore, ₹1,92,000 × 5/12 = ₹80,000. The annual profit is apportioned for 5 out of 12 months. In such questions, remember to divide the elapsed months by 12.