When interim accounts are not prepared, on what basis is the deceased partner’s share of profit up to the date of death generally estimated?

Correct answer: On the basis of the previous year’s profit

When interim accounts are not prepared, the deceased partner’s profit up to the date of death is generally estimated using the previous year’s profit. The previous year’s profit is apportioned according to the time elapsed and then multiplied by the deceased partner’s profit-sharing ratio. Capital, bank balance and drawings do not measure the firm’s profit, so they are not suitable bases. Exam tip: If the partnership deed specifies average profit or another basis, follow that provision.