The General Reserve of Rs. 90,000 is appearing in balance sheet at the time of the change in profit sharing ratio among existing partners. The General Reserve would be transferred among:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → All partners in their old ratio
A general reserve is profit of the past, earned while the old ratio was in force. When the partners only change their ratio, nobody joins or leaves, but the reserve still belongs to the period before the change. So it is transferred to all the partners’ capital accounts in their old ratio; the new ratio governs only the profits of the future.
Why the other options are incorrect
Option (1) All partners in their new ratio — Incorrect. Sharing a past profit in the new ratio would give a gaining partner a share of profits earned before he gained.
Option (2) Gaining partners in their gaining ratio — Incorrect. The gaining ratio is used to compensate for goodwill, not to share reserves.
Option (3) Sacrificing partners in their sacrificing ratio — Incorrect. The reserve belongs to every partner, not only to those who give up a share.
NCERT (2026-27 edition): |