Question

Loan by the deceased partner to the firm is transferred to ______.

Options

• the debit of his Current Account.

• the credit of his Capital Account.

• the debit of Remaining Partners' Capital Accounts.

• the credit of Remaining Partners’ Capital Accounts.

Answer 1

Loan by the deceased partner to the firm is transferred to the credit of his Capital Account.

Explanation:

A loan made by the partner to the firm is an amount payable by the firm (a liability), so on the partner’s death that loan is transferred to the deceased partner’s Capital Account (or, alternatively, to the Deceased Partner’s Executors’ Account) on the credit side as part of preparing the amount payable to the deceased; therefore it is credited to his Capital Account.