Question

Select the most appropriate answer from the alternatives given below :

Share of profit of a deceased partner till the date of death is _________________.
a) debited to P/L Adjustment A/c
b) credited to P/L Adjustment A/c
c) debited to P/L Suspense A/c
d) credited to P/L Suspense A/c

Answer 1

Share of profit of a deceased partner till the date of death is debited to P/L Suspense A/c.

Explanation: The executor of a deceased partner, apart from the other things, is also entitled to a share in profits till the date of his death. Also, it is not possible for any firm to close its books of accounts at any time (during an accounting period). Therefore, in case of death, profits are calculated either on the basis of time or on the basis of sales or turnover. The amount of profit or loss so ascertained is dispensed to the deceased partner through the Profit and Loss Suspense Account.