Various accounting aspects involved on death of a partner are as foll…

Various accounting aspects involved on death of a partner are as follows:

(A) Adjustment in respect of unrecorded assets and liabilities

(B) Treatment of goodwill

(D) Preparation of Executor's loan A/c

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A), (B) and (D) only

On the death of a partner the firm usually continues with the remaining partners, so the work is the same as on retirement, except that the amount due is settled with the deceased partner’s executors.

(A) Adjustment in respect of unrecorded assets and liabilities Correct. Unrecorded assets and liabilities are brought into the books so that the deceased partner gets his fair share.
(B) Treatment of goodwill Correct. Goodwill is treated, as his share of goodwill is part of what is due to him.
(C) Preparation of Realization A/c Incorrect. A Realisation Account is prepared when the firm itself is dissolved and its assets sold; the death of a partner does not dissolve the firm here.
(D) Preparation of Executor’s loan A/c Correct. The amount due is transferred to the executors’ account; if it is not paid at once, it is kept as the executor’s loan.

NCERT (2026-27 edition):
Ascertaining the Amount Due to Retiring/Deceased Partner

Extract from the NCERT textbook

NCERT (2026-27 edition):
Disposal of Amount Due to Retiring Partner – “… It may 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. This shall be taken up later in this chapter.”

NCERT (2026-27 edition):
Accounting Treatment – “When the firm is dissolved, its books of account are to be closed and the profit or loss arising on realisation of its assets and discharge of liabilities is to be computed. For this purpose, a Realisation Account is prepared to ascertain the net effect (profit or loss) of realisation of assets and payment of liabilities which may be is transferred to partner’s capital accounts in their profit sharing ratio.”