Kit Library / Commerce / Accountancy
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Dead partner's dues go to the executor.
On a partner's death, the firm must calculate the total amount due to the deceased partner and pay it to their executor (legal representative). This includes capital balance, goodwill share, profit share, salary, and interest on capital — minus drawings.
↳ The executor receives a single consolidated amount, not individual components.
Who gets the dead partner's money?
↳ The executor steps into the deceased partner's shoes for settlement.
Follow these steps in order.
↳ The final credit balance is the executor's claim.
Goodwill = average profit × years' purchase.
Deceased partner's share = Firm's goodwill × deceased partner's profit-sharing ratio.
↳ Always use the profit-sharing ratio to find the deceased partner's share of goodwill.
Time-proportion the last year's profit.
↳ Use the last year's profit and the exact months from the accounting year start.
Time-factor every entitlement.
↳ Interest and salary are always prorated for the months until death.
Drawings reduce the executor's claim.
↳ Drawings are a debit; missing them overstates the executor's claim.
Revaluation gain goes to all partners.
↳ Revaluation is a firm-level adjustment, not a deceased-partner-only entry.
Two methods, one choice.
↳ Check the deed to know which goodwill method to apply.
Average of 4 years × 3.
Profits: ₹30,000, ₹25,000, ₹25,000, ₹40,000. Years' purchase = 3. Narendra's ratio = 2/10.
↳ Narendra's goodwill share of ₹18,000 is credited to his capital account.
3 months at last year's rate.
Last year's profit = ₹40,000; death on 30 June (3 months); ratio = 2/10.
↳ Narendra's profit share of ₹2,000 is credited to his capital account.
Marks live in the working notes.
↳ Working notes carry dedicated marks — never skip them.
Six credits, one debit.
Remember the deceased partner's capital account credits as C-G-P-S-I: Capital, Goodwill, Profit share, Salary, Interest — then Deduct drawings.
↳ C-G-P-S-I-D keeps all entitlements and the drawings deduction in mind.
No deed, no clarity.
A partnership deed pre-defines how goodwill, profit share, salary, and interest are calculated on death. Without it, disputes with the executor can delay settlement for months.
↳ A clear deed protects both the firm and the deceased partner's family.
Old ratio only for the deceased.
↳ Old ratio applies to all of the deceased partner's entitlements.
When a partner dies, the firm must settle the deceased partner's account with the executor. This involves revaluation of assets, goodwill valuation, profit share up to death, salary, interest on capital, and drawings. Th…
~15 min · full explanation, examples & memory tricks in the app
All 18 questions, laddered from warm-up to topper-level, each with its answer and the reasoning behind it.
Q1. What is the primary purpose of preparing the deceased partner's capital account?
BeginnerTo determine the amount payable to his executor
The capital account at death is a settlement statement showing the total amount owed to the deceased partner's executor.
Q2. In which ratio is the net revaluation gain or loss shared at the time of a partner's death?
BeginnerOld profit-sharing ratio
Since no new ratio has been agreed, the old profit-sharing ratio applies to revaluation and goodwill.
Q3. A partner dies 3 months after the last balance sheet date. What time fraction is used for profit up to death?
Beginner3/12
The time fraction is months up to death divided by 12, so 3/12.
Q4. Which of the following is added to the deceased partner's capital account?
BeginnerSalary due up to death
Salary due is a claim against the firm and is credited to the capital account.
Q5. A partner withdrew ₹900 per month for 3 months before death. How much is deducted as drawings?
Beginner₹2,700
Drawings = 900 × 3 = ₹2,700.
Q6. After all adjustments, the balance of the deceased partner's capital account is transferred to:
BeginnerExecutor's Account
The final balance is transferred to the Executor's Account, which is a liability.
Q7. The deceased partner's share of goodwill is credited to his capital account and the same amount is debited to the continuing partners' capital accounts in their gaining ratio.
BeginnerTrue
The deceased partner's share of goodwill is credited to his capital account and the same amount is debited to the continuing partners' capital accounts in their gaining ratio.
Q8. Narendra died on 30th June. His opening capital was ₹12,000 and interest on capital is 10% p.a. What is the interest on capital due to him?
Intermediate₹300
Interest = 12,000 × 10% × 3/12 = ₹300.
Q9. Firm's goodwill is ₹90,000. Narendra's profit share is 2/10. What is his share of goodwill?
Intermediate₹18,000
Share of goodwill = 2/10 × 90,000 = ₹18,000.
Q10. Last year's profit was ₹40,000. A partner with 1/4 share died after 3 months. What is his share of profit up to death?
Intermediate₹2,500
Profit for 3 months = 40,000 × 3/12 = ₹10,000; his share = 1/4 × 10,000 = ₹2,500.
Q11. Which account is prepared to record revaluation of assets and liabilities at the time of a partner's death?
IntermediateProfit and Loss Adjustment Account
Revaluation adjustments are routed through the Profit and Loss Adjustment Account.
Q12. What does 'three years' purchases' mean in goodwill valuation?
IntermediateGoodwill = 3 × Average Profit
'Three years' purchases' means goodwill is three times the average profit.
Q13. A firm's average profit is ₹30,000 and goodwill is valued at 3 times average profit. What is the firm's goodwill?
Intermediate₹90,000
Goodwill = 3 × 30,000 = ₹90,000.
Q14. A partner dies. The firm revalues assets and finds a net gain of ₹12,000. The old ratio is 5:3:2. What is the deceased partner's share of the gain if his share is 2/10?
Advanced₹2,400
Share of gain = 2/10 × 12,000 = ₹2,400.
Q15. A partner with 1/4 share died 3 months after the last balance sheet. Average profit is ₹90,000. What is his share of profit up to death?
Advanced₹5,625
Profit for 3 months = 90,000 × 3/12 = ₹22,500; his share = 1/4 × 22,500 = ₹5,625.
Q16. A student calculates profit up to death using the full year's profit instead of the proportionate profit. What is the error?
AdvancedHe ignored the time fraction (months ÷ 12)
The correct formula includes the time fraction; using full-year profit omits it.
Q17. A partner named Narendra died on June 30. His opening capital was ₹12,000, and he was entitled to a salary of ₹1,200 per month. If the average profit of the last four years is ₹30,000, calculate the total amount payable to his executor, considering his drawings of ₹900 per month for three months and interest on capital at 10% p.a.
Advanced₹18,300
The total amount payable to the executor includes: Opening capital (₹12,000) + Salary for 3 months (₹3,600) + Interest on capital (₹300) + Share of profit up to death (₹2,000) - Drawings (₹2,700) = ₹12,000 + ₹3,600 + ₹300 + ₹2,000 - ₹2,700 = ₹18,300.
Q18. A partner with a 1/4 share dies, and the firm has a net revaluation gain of ₹12,000 shared in the old ratio of 5:3:2. Calculate the deceased partner's share of this gain and determine the total balance in his capital account after accounting for his drawings of ₹2,700 and profit up to death based on last year's profit of ₹40,000 for 3 months.
Advanced₹7,300
The deceased partner's share of the revaluation gain is ₹12,000 × 2/10 = ₹2,400. Profit up to death is ₹40,000 × 3/12 × 1/4 = ₹2,500. Thus, the balance in his capital account is Share of revaluation gain (₹2,400) + Profit up to death (₹2,500) - Drawings (₹2,700) = ₹2,400 + ₹2,500…
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