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CMA Intermediate · Financial Accounting · Death of Partner

When a partner dies and the amount due is not paid immediately, the executors have the option to claim either interest at a stated rate or a share of profit earned using the deceased's capital. Under the Indian Partnership Act, 1932, if no agreement exists and the surviving partners continue to use the deceased's share, the executors may claim:

The executors may choose between 6% simple interest per annum on the amount due and the share of profit attributable to the use of the deceased partner's share of the firm's assets. This option exists when the business continues without final settlement and there is no contrary agreement.

  1. AOnly a fixed 12% interest in all cases
  2. BNothing until the firm is dissolved
  3. CEither 6% simple interest per annum or the profit attributable to the use of his share, at their optionCorrect
  4. DOnly the profit attributable to the use of his share

Explanation

Under the Act, where surviving partners carry on the business without final settlement of accounts, the deceased's estate may, absent contrary contract, claim at its option either the profit attributable to the use of his share or interest at 6% per annum. A fixed 12% rate is not provided by the Act.

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