At the time of admission of a new partner, general reserve, appearing in the old Balance Sheet is transferred to:

Old partners capital A/c in old ratio

The correct answer is Option (2) - Old partners capital A/c in old ratio.

Sometimes a firm may have accumulated profits not yet transferred to capital accounts of the partners. These are usually in the form of general reserve, reserve and/or Profit and Loss Account. The new partner is not entitled to have any share in such accumulated profits. These are distributed among the partners existing partners by transferring it to their capital or current accounts in old profit sharing ratio. Similarly, if there are some accumulated losses in the form of a debit balance of profit and loss account and/or deferred revenue expenditure appearing in the balance sheet of the firm, they are also debited to partners capital or current A/c.