Question

Assertion (A): In the event of death of a partner, in case there is no change in the profit sharing ratio of continuing partners, the deceased partner’s share of profit till the date of his death is debited to Profit & Loss Suspense Account.

Reason (R): Profit and Loss Suspense Account is closed by transferring its balance to Profit & Loss Account.

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

Options

• (A) and (R) both are correct and (R) correctly explains (A).

• Both (A) and (R) are correct but (R) does not correctly explain (A).

• Both (A) and (R) are incorrect.

• (A) is incorrect but (R) is correct.

Answer 1

Both (A) and (R) are correct but (R) does not correctly explain (A).