On the death of a partner, his share of loss in the firm till the dat…

On the death of a partner, his share of loss in the firm till the date of his death is transferred to:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Credit of Profit & Loss Suspense Account

A partner can die at any time during the year, but the firm’s accounts are closed only at the year end. His share of profit or loss from the last Balance Sheet to the date of death (the intervening period) is therefore estimated and put through a temporary account, the Profit and Loss Suspense Account, without disturbing the Profit and Loss Account of the year.

Share of profit: Profit and Loss Suspense A/c is debited and the deceased partner’s capital is credited.
Share of loss: the entry is reversed. The deceased partner’s capital is debited (his claim falls) and Profit and Loss Suspense A/c is credited.

Why the other options are incorrect

Option (1) Debit of Profit & Loss Account — Incorrect. The Profit and Loss Account of the year is not opened mid-year for one partner’s share; the suspense account is used instead.
Option (2) Credit of Profit & Loss Account — Incorrect. For the same reason the Profit and Loss Account is not used, and a credit would in any case treat a loss as a gain.
Option (3) Debit of Profit & Loss Suspense Account — Incorrect. The suspense account is debited for a share of profit. For a share of loss it is credited.

NCERT (2026-27 edition):
Death of a Partner – “As stated earlier, the accounting treatment in the event of death of a partner is similar to that in case of retirement of a partner, and that in case of death of a partner his claim is transferred to his executors and settled in the same manner as that of the retired partner. However, there is one major difference that, while the retirement normally takes place at the end of an accounting period, the death of a partner may occur any time. Hence, in case of a partner, his claim shall also include his share of profit or loss, interest on capital, interest on drawings (if any) from the date of the last Balance Sheet to the date of his death of these, the main problem relates to the calculation of profit for the intervening period (i.e., the period from date of the last balance sheet and the date of the partner’s death.”

On the death of a partner, his share of loss in the firm till the date of his death is transferred to:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Credit of Profit & Loss Suspense Account

Share of profit: Profit and Loss Suspense A/c is debited and the deceased partner’s capital is credited.
Share of loss: the entry is reversed. The deceased partner’s capital is debited (his claim falls) and Profit and Loss Suspense A/c is credited.

Why the other options are incorrect

Option (1) Debit of Profit & Loss Account — Incorrect. The Profit and Loss Account of the year is not opened mid-year for one partner’s share; the suspense account is used instead.
Option (2) Credit of Profit & Loss Account — Incorrect. For the same reason the Profit and Loss Account is not used, and a credit would in any case treat a loss as a gain.
Option (3) Debit of Profit & Loss Suspense Account — Incorrect. The suspense account is debited for a share of profit. For a share of loss it is credited.