Question

The amount received from the insurance company on joint life policy of partners in excess of its surrender value should be credited to partners ________________.

• A. Equally
• B. In the profit sharing ratio
• C. In the ratio of capitals
• D. None of the above

Answer 1

The correct option is B In the profit sharing ratio

When the amount received in excess of the surrender value, it results in gain and is transferred to Capital accounts of the partners in their profit sharing ratio and the policy reserve is credited to partners' capital A/c.