If the firm’s annual average profit is ₹7,80,000 and a partner dies 5 months into the year, what is the estimated share of profit up to the date of death? Assume the partner’s profit-sharing ratio is 1.

Correct answer: ₹3,25,000

Profit up to the date of death = Annual average profit × fraction of the year elapsed × the partner’s profit-sharing ratio. Therefore, ₹7,80,000 × 5/12 × 1 = ₹3,25,000. Option B incorrectly uses 6 months instead of 5. Exam tip: Convert the annual profit into the proportion applicable to the elapsed months, and then multiply by the partner’s profit-sharing ratio if one is provided.