Case: The deed does not specify the method of estimating profit. What is the most appropriate basis?

Correct answer: Average of past profits

The governing concept is estimation of a deceased partner’s share of profit for the period between the last accounts and the date of death. If the partnership deed is silent about the method, a reasonable and commonly accepted basis is the average of past profits, often adjusted for the relevant time period. This approach uses the firm’s established earning pattern rather than an unrelated balance or a single revenue item. Hence option A is the most appropriate answer. Estimated cash is not the same as profit because cash includes receipts and payments from several periods. Sales alone ignore expenses, and purchases alone do not measure earnings. The exact computation may require a time fraction, but the stated basis remains average past profit.