Executor account is prepared on

Executor Account is a personal account prepared to record all amounts payable to the legal representatives (executor or heir) of a deceased partner.

When a partner dies, their capital account balance along with other dues cannot be settled directly as the deceased partner no longer exists legally. Therefore, all amounts due are transferred to the Executor's Account (or Legal Representative's Account).

The Executor Account is credited with:

• Capital balance of deceased partner
• Share in goodwill (if any)
• Share in revaluation profit
• Share in reserves and accumulated profits
• Share in profit till the date of death
• Interest on capital (if applicable)

The Executor Account is debited with:

• Drawings of deceased partner
• Interest on drawings (if any)
• Share in revaluation loss (if any)
• Final payment made to executor

In case of admission, retirement, or change in profit sharing ratio, the partners are alive and their capital accounts are adjusted directly. There is no need for an executor account as the partners themselves can receive their dues.

However, when a partner dies, legal formalities require that all dues be transferred to the executor's account, who then receives the payment on behalf of the deceased partner's estate.

The correct answer is Option 4.