Which of the following needs no adjustments in the books of firm at the time of admission of a new partner?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Appointment of new employee
On the admission of a partner, the books are adjusted only for matters that change the partners’ shares or their capitals: the new and sacrificing ratios, goodwill, revaluation, accumulated profits and losses, and the capitals.
Option (1) Goodwill — Needs adjustment. The old partners must be compensated for the share of profit they give up, through the treatment of goodwill.
Option (2) Revaluation of assets and liabilities — Needs adjustment. Assets and liabilities are brought to their current values so that the gain or loss goes to the old partners.
Option (3) Reserves and other accumulated profits and losses — Needs adjustment. These were earned before admission and are distributed among the old partners.
Appointing a new employee is an ordinary running matter of the business. It changes nobody’s share or capital, so it needs no adjustment.
NCERT (2026-27 edition):
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