At the time of retirement of partner, If General Reserve appears in Balance Sheet of the firm, it will be distributed among the partners in:

Old Profit Sharing Ratio

The correct answer is Option (3) - Old Profit Sharing Ratio.

Sometimes, the Balance Sheet of a firm may show accumulated profits in the form of general reserve or credit balance of profit and balance account and/on accumulated losses in the form of profit and loss account debit balance. The retiring/deceased partner is entitled to his/her share in the accumulated profits and is also liable to share the accumulated losses, if any. These accumulated profits or losses belong to all the partners and should be transferred to the capital accounts of all partners in their old profit sharing ratio.