Why profit and loss suspense account is opened by the partnership firm?

To transfer share of profit of deceased partner for intervening period

The correct answer is option 4- To transfer share of profit of deceased partner for intervening period.

Profit and loss suspense account is opened by the partnership firm To transfer share of profit of deceased partner for intervening period.

To account for the deceased partner's share of profits and loss during the interim period in the company's financial records, the following journal entry is recorded:

FOR PROFIT-
Debit Profit and Loss Suspense Account and Credit Deceased Partner's Capital Account.
Subsequently, the Profit and Loss Suspense Account is reconciled by transferring its balance to the Gaining Partners' Capital Accounts based on their gaining ratio.

FOR LOSS-
Debit Deceased Partner's Capital Account and credit Profit and Loss Suspense Account.