Practicing Success
General Reserve at the time of admission of a new partner is transferred to which account? |
Revaluation Account Old Partner's Capital Account Profit and Loss Adjustment Account Realisation Account |
Old Partner's Capital Account |
The correct answer is option 2- Old Partner's Capital Account. Accumulated profits are in the form of general reserve, reserve fund etc. The new partner is not entitled to share in these reserves. Hence, at the time of admission, these reserves are transferred to the old partner's capital accounts in their old profit-sharing ratio. |