Question

On the death of a partner, his claim is transferred to which account?

Hint:

Executor's Account represents the deceased partner's legal heir for settlement.

Answer 1

When a partner dies, his capital account must be settled by paying all amounts due to him. These include his capital balance, share of profits up to the date of death, interest on capital, share in reserves and goodwill entitlement. To record this liability properly, the amount due is transferred from the deceased partner's capital account to the Executor's Account. This ensures that the firm recognizes the legal representative who will receive the settlement. The executor's account is then paid off either immediately or in installments depending on agreement. This process ensures fairness and legal compliance.