Question

Joint life policy amount received from insurance company in excess of its surrender value is credited to the capital account of the partners.

• A. In profit-sharing ratio
• B. Equally
• C. In capital ratio
• D. All of these

Answer 1

The correct option is A In profit-sharing ratio

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The firm pays the premium on the Joint Life Policy. The Insurance Company pays the amount of the Joint Life Policy on the maturity of the policy or the death of a partner, whichever is earlier.

The surrender value at the time of the death of a partner is distributed among the remaining partners and the legal representative of the deceased partner.

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