Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

What will the partnership firm do, if the deceased partner's capital account showed a debit balance?

Options:

Transfer to his loan account

Transfer to P & L account

Recovered from the private estate of the deceased partner

Recovered from the private estate of remaining partners

Correct Answer:

Recovered from the private estate of the deceased partner

Explanation:

As partner's liability is unlimited, if the deceased partner's capital account showed a debit balance then this amount can be given by his executor to the firm or recovered from his private estate by the firm.