There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A): The amount due to the deceased partner after his death is never transferred to his Loan Account.
Reason (R): Amount due to the deceased partner may be paid immediately or later in installments, all depending on the agreement between partners.

Assertion (A) is not correct but Reason (R) is correct.

The outgoing partner’s account is settled as per the terms of the partnership deed i.e., in lumpsum immediately or in various installments with or without interest as agreed or partly in cash immediately and partly in installments at the agreed intervals. In the absence of any agreement, Section 37 of the Indian Partnership Act, 1932 is applicable, which states that the outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits that have been earned with his/her money (i.e., based on capital ratio). Hence, the total amount due to the retiring partner which is ascertained after all adjustments have been made is to be paid immediately to the retiring partner. In case the firm is not in a position to make the payment immediately, the amount due is transferred to the retiring Partner’s Loan Account, and as and when the amount is paid it is debited to his account.
It may be noted that 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.