Practicing Success
Debit balance of profit and loss account at the time of admission of a partner is transferred to which account? |
Credit of old partner’s Capital Accounts Debit of Old partner’s Capital Accounts Debit of Capital Accounts of all the Partners Credit of Capital Accounts of all the Partners |
Debit of Old partner’s Capital Accounts |
The correct answer is option 2- Debit of Old partner’s Capital Accounts. 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, it should be transferred to the old partners’ capital accounts on the debit side. Transferring balance to the debit side of old partner's account will reduce their balance of capital. |