Identify the correct sequence to be followed at the time of Death of…

Identify the correct sequence to be followed at the time of Death of Partner.

A. Calculation of gaining Ratio.
B. Treatment of goodwill
C. Calculation of new Profit Ratio
D. Calculation of Amount transferred to Decreased Partner's Executor
E. Preparation of deceased Partner Capital Account

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → C, A, B, E, D

On the death of a partner the steps follow the order of the accounting aspects of retirement or death, and each step needs the one before it:

C. Calculation of new Profit Ratio — first fix how the surviving partners will share future profits.

A. Calculation of gaining Ratio. — gaining share = new share − old share, so it needs the new ratio.

B. Treatment of goodwill — the deceased partner’s share of goodwill is borne by the gaining partners in the gaining ratio.

E. Preparation of deceased Partner Capital Account — goodwill, reserves, revaluation and profit up to death are entered in it.

D. Calculation of Amount transferred to Decreased Partner's Executor — the balance of the capital account is transferred to the executor’s account last.

NCERT (2026-27 edition):
Ascertaining the Amount Due to Retiring/Deceased Partner – “… Thus, similar to admission, the various accounting aspects involved on retirement or death of a partner are as follows: 1. Ascertainment of new profit sharing ratio and gaining ratio; 2. Treatment of goodwill; 3. Revaluation of assets and liabilities; 4. Adjustment in respect of unrecorded assets and liabilities; 5. Distribution of accumulated profits and losses; 6. Ascertainment of share of profit or loss up to the date of retirement/death; 7. Adjustment of capital, if required; 8. Settlement of the amounts due to retired/deceased partner; …”

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.”