State whether the following statement is True or False with reason.
1) A deceased partner is not entitled to the Goodwill of the firm.
A deceased partner’s contribution was there in the development of business and goodwill is the value of the business in terms of money. Hence, a deceased partner is entitled to receive the goodwill of the firm.
2) A deceased partner is entitled to his share of General Reserve.
General reserve is created out of past undistributed profit. Past profit is earned due to the efforts and hard work of all the partners including a partner who is now dead. Hence a deceased partner has right on it and therefore a deceased partner is entitled to receive his share of General reserve.
3) If Goodwill is written off a deceased partner’s capital account is debited.
When the benefits of goodwill are given to the deceased partner, his capital account is credited and when such goodwill is written off, capital accounts of remaining partners are debited.
4) After the death of a partner, the entire amount due to the deceased partner is paid to the legal representative of the deceased partner.
After the death of a partner, the entire amount due to the deceased partner is paid to the legal representative of the deceased partner as he is the only person who has legal right on that amount.
5) For recording the Profit or Loss up to the date of death, Profit and Loss Appropriation Account is operated.
For recording the profit or loss up to the death, Profit and Loss suspense Account is created and operated. This is because final accounts cannot be prepared on the date of the death of a partner. Till that period a separate account called Profit and Loss Suspense A/c is prepared.