Maharashtra State BoardHSC Commerce 12th Board Exam
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Select the Most Appropriate Answer from the Alternatives Given Below : - Book Keeping and Accountancy

MCQ

Select the most appropriate answer from the alternatives given below :

An amount received from the Insurance Company against the joint life policy is __________.

Options

  • debited to deceased partner

  • credited to deceased partner

  • credited to continuing partners capital A/c

  • credited to all partners capital A/c in their profit sharing ratio.

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Solution

An amount received from the Insurance Company against the joint life policy is credited to all partners’ capital A/c in their profit sharing ratio.

Explanation: Joint life policy is an insurance policy purchased by a firm on the joint lives of all the partners. In this manner, it is an asset of the firm. So, every partner, including the deceased partner, has as much right on it as the other (continuing) partners. Therefore, on the death of any one partner, the amount received from the insurance company against the joint life policy is credited to All Partners’ Capital Accounts in their old profit sharing ratio.

Concept: Retirement Or Death of a Partner - Adjustment of Capitals
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APPEARS IN

Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 5 Reconstitution of Partnership (Death of Partner)
Exercise | Q 4 | Page 140
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