Arrange the following steps in correct sequence. A. Transfer of accum…

Arrange the following steps in correct sequence.

A. Transfer of accumulated reserve
B. Calculation of revaluation gain/loss
C. Balancing capital of old partner
D. Adjustment of goodwill
E. Calculation of proportionate capital of new partner

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → B, D, A, C, E

On admission, the old partners’ capitals are first adjusted for every matter that belongs to the old firm; only then can they be balanced and the new partner’s capital be worked out from them:

(B) Calculation of revaluation gain/loss – assets and liabilities are revalued and the result goes to the old partners.

(D) Adjustment of goodwill – the new partner’s share of goodwill is credited to the sacrificing partners.

(A) Transfer of accumulated reserve – reserves and accumulated profits go to the old partners in the old ratio.

(C) Balancing capital of old partner – the old partners’ capitals are struck after all these adjustments.

(E) Calculation of proportionate capital of new partner – the new partner’s capital is then fixed in proportion to his share, on the basis of those adjusted capitals.

NCERT (2026-27 edition):
Summary – “… Various matters which need adjustments in the books of firm at the time of admission of a new partner are : goodwill, revaluation of assets and liabilities, reserves and other accumulated profits and losses and the capitals of the old partners’ (if agreed).”

NCERT (2026-27 edition):
Do It Yourself – “… 3. Ashoo and Rahul are partners sharing profits in the ratio of 5:3. Gaurav was admitted for 1/5 share and was asked to contribute proportionate capital and Rs. 4,000 for premium (goodwill). The Capitals of Ashoo and Rahul, after all adjustments relating to revaluation, goodwill etc., worked out to be Rs. 45,000 and Rs. 35,000 respectively.”