Question

Objective Questions :
Answer in one Sentence :

How is the share of deceased partner in accrued profit calculated?

Answer 1

The share of a deceased partner in a firm’s profit can be calculated in two ways, i.e. on the basis of time or sales. Based on time, the profits are assumed to have arisen uniformly over the year and the deceased partner’s share is calculated according to the number of months he/she was alive during the year. In case sales are used as a base, we need sales for the year and sales up to the date of death and accordingly, rate of profit to sales can be calculated.