Where will the accumulated profits and reserves are transferred at the time of dissolution of partnership firm?
Answer & explanation
Correct answer: option 3
* For transfer of accumulated profits in the form of general reserve to partners’ capital accounts in their profit sharing ratio:
General Reserve A/c Dr.
To Partners’ Capital A/c (individually)
* For transfer of fictitious assets, if any, to partners’ capital accounts in their profit sharing ratio:
Partners’ Capital A/c (individually) Dr.
To Fictitious Asset A/c