In partnership accounting, what is the key difference in the accounting treatment for the amount due to a retiring partner and a deceased partner?
Answer & explanation
Correct answer: option 3
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.