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The firm’s annual profit is ₹18,00,000, earned uniformly throughout the year. What is the estimated profit for the 2 months up to the partner’s death?

Answer and explanation

Correct answer: ₹3,00,000

Since profit is earned uniformly, the estimated profit for 2 months is ₹18,00,000 × \(2/12\) = ₹3,00,000. Hence, option A is correct. ₹1,50,000 is the profit for only 1 month, while ₹4,50,000 and ₹6,00,000 represent 3 and 4 months’ profit respectively. Exam tip: For profit up to the date of death, multiply annual profit by the relevant number of months divided by 12.

Related tags

AccountancyDeceased PartnerProfit Up To DeathTime BasisPartnership ReconstitutionDeceased Partner’s ShareDeceased Partner S ShareReconstitution Retirement Or Death Of A Partner

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