The reserve fund at the time of admission of a new partner is transferred to.........
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Old Partners Capital account
A reserve fund is profit kept back from earlier years, when only the old partners were in the firm. The new partner has no share in it, so on admission it is transferred to the old partners’ capital accounts in their old profit sharing ratio.
Why the other options are incorrect
Option (1) Revaluation account — Incorrect. The revaluation account records changes in the values of assets and liabilities; a reserve is not revalued.
Option (2) Capital Reserve account — Incorrect. A capital reserve belongs to company accounts; a firm’s reserve is distributed to its partners.
Option (3) All Partners Capital account — Incorrect. “All partners” would include the new partner, who has no right to past profits.
NCERT (2026-27 edition):
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