CUET Preparation Today
In partnership accounting, what is the key difference in the accounting treatment for the amount due to a retiring partner and a deceased partner? |
The amount due to a retiring partner is never paid, while that of a deceased partner is written off. The amount due to a deceased partner is credited to the capital account, while that of a retiring partner is transferred to a liability account. In the case of a deceased partner, the amount due is transferred to the Executors’ Account, whereas for a retiring partner, it is settled directly. There is no difference; the treatment is exactly the same in both cases. |
In the case of a deceased partner, the amount due is transferred to the Executors’ Account, whereas for a retiring partner, it is settled directly. |
The correct answer is option 3- In the case of a deceased partner, the amount due is transferred to the Executors’ Account, whereas for a retiring partner, it is settled directly. The accounting treatment for disposal of amount due to retiring partner and deceased partner is similar with a difference that in case of death of a partner, the amount credited to him/her is transferred to his Executors’ Account and the payment has to be made to him/her. |
