Question

How is a debit balance of profit & loss account dealt with on death of a partner? (Answer in one sentence)

Answer 1

BCOZ PARTNER INVEST CAPITAL , GOODWILL IN THE FIRM

SO

FIRMS PRIORITY WILL BE RETURN ALL OF INVESTMENT OF DECEASED PARTNER TO HIS EXECUTOR ..

Answer 2

Debit balance is equally distributed amongst all the remaining partners after the death of one partner.

* It refers to the total loss of the firm that gets accumulated in the profit and loss account.

* Loss is to be borne equally by all the other partners after the death of one partner.

* Therefore, the debit balance is transferred to the capital accounts( debit side) of all the partners in a particular ratio.

* This ratio is referred to as the old profit sharing ratio.