Question

Anita, Mitra and Param are partners. Param died on 28th December, 2025, and as per the Partnership Deed, financial statements as on 28th December, 2025 were prepared. Share of profit of Param was determined as ₹ 1,50,000. Which account will be debited to transfer Param’s share of profits?

Options

• Profit & Loss Suspense Account

• Profit & Loss Appropriation Account

• Profit & Loss Account

• None of these

Answer 1

Profit & Loss Appropriation Account

Explanation:

A Profit & Loss Suspense Account is only used for mid-year deaths when profits are calculated on an estimated basis without closing the books. In this case, formal financial statements were fully prepared on the exact date of death. Since the actual net profit has been officially calculated, it is distributed directly through the Profit & Loss Appropriation Account, just like at the end of a regular financial year.