In the case of dissolution of a partnership firm, the accumulated profits and reserves are transferred to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Partners’ Capital Accounts
Accumulated profits and reserves (general reserve, credit balance of profit and loss account) belong to the partners. On dissolution they are not part of the assets to be realised, so they are transferred straight to the partners’ capital accounts in their profit sharing ratio.
NCERT (2026-27 edition):
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