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Accounting for a deceased partner’s share of profit accrued up to the date of death reflects which principle?

Answer and explanation

Correct answer: Equitable settlement

A deceased partner is entitled to the profit earned up to the date of death because that profit accrued while the partner was part of the firm. Crediting this amount to the deceased partner’s capital account or executor’s account ensures a fair settlement and prevents the continuing partners from retaining an amount that is not wholly theirs. Exam tip: Calculate and record the deceased partner’s profit share only up to the date of death.

Related tags

Partnership AccountsDeceased PartnerProfit ShareEquitable SettlementReconstitutionDeceased Partner’s ShareDeceased Partner S ShareReconstitution Retirement Or Death Of A Partner

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