Question

Assertion (A): Deceased partner is entitled to his/her share in Workmen’s Compensation Reserve and is also liable to share Workmen Compensation Claim, if any.

Reason (R): Accumulated profits or losses belong to all the partners and are transferred to the capital accounts of all partners in their old profit-sharing ratio.

In the context of the above two statements, which of the following is correct?

विकल्प

• Assertion (A) is correct, but Reason (R) is wrong.

• Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are incorrect.

• Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

Answer 1

Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

Explanation:

The Workmen’s Compensation Reserve is an accumulated profit created in the past when all partners were active. If a claim arises, it modifies the net surplus or deficit of that reserve. Since all accumulated profits and losses belong to the old partners, they must be shared by everyone (including the deceased partner) in their old profit-sharing ratio, making the Reason a direct explanation of the Assertion.