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

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

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Credit side of P and L suspense a/c

When a partner dies during the year, his share of profit up to the date of death is passed through the Profit and Loss Suspense Account, because the books are not closed on that date. For a profit, P&L Suspense A/c is debited and the deceased partner's capital account is credited. For a loss, the entry is reversed: the deceased partner's capital account is debited and P&L Suspense A/c is credited.

Option (1) Debit side of P and L a/c — Incorrect. The Profit and Loss Account is prepared only when the books are closed at the year end. The deceased partner's share for part of the year is worked out without closing the books, so it does not go to this account.

Option (2) Credit side of P and L suspense a/c — Correct. The deceased partner bears his share of loss, so his capital account is debited, and the other side of the entry is the credit to P&L Suspense A/c.

Option (3) Debit side of P and L Suspense a/c — Incorrect. P&L Suspense A/c is debited when the deceased partner gets a share of profit, not when he bears a share of loss.

Option (4) Credit side of P and L a/c — Incorrect. As with Option (1), the Profit and Loss Account is not used for a share worked out up to the date of death; the suspense account takes its place.

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. Since, it is considered cumbersome to close the books and prepare final account, for the period, the deceased partner’s share of profit may be calculated on the basis of last year’s profit (or average of past few years) or on the basis of sales.”

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

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Credit side of P and L suspense a/c

Option (3) Debit side of P and L Suspense a/c — Incorrect. P&L Suspense A/c is debited when the deceased partner gets a share of profit, not when he bears a share of loss.