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Assuming that profit accrues evenly throughout the year, if the estimated annual profit is ₹30,00,000 and a partner dies after 5 months of the financial year, what is the firm’s estimated profit up to the date of death?

Answer and explanation

Correct answer: ₹12,50,000

Profit up to the date of death = Estimated annual profit × elapsed months / 12. Therefore, ₹30,00,000 × 5/12 = ₹12,50,000, so option A is correct. Option C represents profit for six months, not five months. In such questions, convert the elapsed period into a fraction of the 12-month financial year.

Related tags

AccountancyPartnershipReconstitutionPartner RetirementPartner DeathProfit ApportionmentDeceased Partner’s ShareDeceased Partner S Share

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