CA Foundation Reconstitution Death — practice questions

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Reconstitution Death questions and exercises with answers

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Amount due to a deceased partner up to date of death is transferred toRead the answer and worked solution →Share of profit of deceased partner from beginning of year to date of death is usually computed usingRead the answer and worked solution →

Worked practice questions

Amount due to a deceased partner up to date of death is transferred to

Capital reserve
Goodwill A/c
Executor account
General reserve

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Correct answer: C. Executor account

1. On death, the deceased's share belongs to the legal heir or executor. 2. All credits (capital, share in goodwill, reserves, profit to date) and debits (drawings) are settled into the Executor's A/c. 3. Balance is paid as agreed (lump sum or instalments with 6% interest). 4. Hence (B) is correct. _Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 5 "Reconstitution of Partnership (Death of Partner)", §5.1 ¶§5.1_

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Share of profit of deceased partner from beginning of year to date of death is usually computed using

Capital ratio (typical) (typical)
Sacrificing ratio (typical) (typical)
Bank rate (typical) (typical) (typical)
Last year profit prorated for the period

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Correct answer: D. Last year profit prorated for the period

1. A common method (Time Basis) prorates last year's profit for the number of months till the death. 2. Alternatively the Turnover/Sales basis may be used if past-period sales data exist. 3. Both methods rely on existing trends, not on capital or sacrificing ratios. 4. Hence (C) is the standard approach. _Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 5 "Reconstitution of Partnership (Death of Partner)", §5.2 ¶§5.2_

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