Case: The partnership deed does not specify the method for estimating profit up to the date of a partner’s death. In such a situation, which basis is generally adopted?

Correct answer: Average profit of previous years

When the deed does not prescribe a specific method, the average profit of the previous few years is generally used to estimate the profit up to the partner’s date of death. Bank balance and total assets show the financial position of the business, not its profit, while cash sales alone cannot determine actual profit. Exam tip: check the partnership deed first; if it is silent, consider the previous-profit or average-profit basis.