Question

Which of the following statement is correct?

Options

• Deceased partner’s legal heir becomes partner in the firm on his death.

• Deceased partner does not share loss from the beginning of the accounting year up to the date of death.

• Drawings by the deceased partner from the beginning of the accounting year up to the date of death are transferred to the debit of his Capital Account.

• Balance in the Deceased Partner’s Current Account is not transferred to his Capital Account.

Answer 1

Drawings by the deceased partner from the beginning of the accounting year up to the date of death are transferred to the debit of his Capital Account.

Explanation:

Drawings made by a partner up to the date of death are written off (debited) against the deceased partner’s capital account when computing the amount payable to his legal representatives. The deceased partner (or his representatives) is entitled to his share of profit, and also bears his share of any loss, for the period from the start of the accounting year to the date of death. Legal heirs are not automatically admitted as partners; they are paid the amount due to the deceased partner (executors/representatives), and current-account balances are adjusted/transferred when arriving at the capital/executor’s balance.