At the time of admission of a new partner, general reserve appears in the old balance sheet is transferred to:

Old partner's capital account

The correct answer is Option (3) → Old partner's capital account

• General Reserve represents accumulated profits of the firm that belong to the old partners (since it was created before the new partner’s admission).

• At the time of admission of a new partner, the new partner should not get a share in past profits.

• Hence, the balance of General Reserve is distributed among the old partners in their old profit-sharing ratio.