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General Reserve at the time of admission of a partner is transferred to ____________ . 
  • a)
    Revaluation Account 
  • b)
    Capital Accounts of all partners, including new partner 
  • c)
    None of the these
  • d)
    Old Partner's Capital Account 
Correct answer is option 'D'. Can you explain this answer?
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General Reserve at the time of admission of a partner is transferred t...
Sometimes a firm may have accumulated reserves not yet transferred to the partner's capitals accounts. These are in the form of general reserve, reserve fund etc. The new partner is not entitled to share in these reserves. Hence, at the time of admission, these reserves are transferred to the old partner's capital accounts in their profit sharing ratio.
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General Reserve at the time of admission of a partner is transferred t...
Explanation:
When a new partner is admitted to a partnership firm, there are various adjustments that need to be made in the books of accounts. One of these adjustments is the transfer of the General Reserve at the time of admission of a partner.

Transfer of General Reserve:
The General Reserve represents the accumulated profits of the partnership that have not been distributed to the partners. It is usually created to meet future contingencies or to strengthen the financial position of the firm.

When a new partner is admitted, the existing partners may decide to transfer a portion of the General Reserve to the Old Partners' Capital Accounts. This is done to compensate the existing partners for the increase in their profit-sharing ratio due to the admission of the new partner.

Reason for transferring to Old Partners' Capital Accounts:
The General Reserve belongs to all the partners of the firm, including the new partner. Therefore, it would not be appropriate to transfer the General Reserve to the Capital Accounts of all partners, including the new partner, as mentioned in option (b). This is because the new partner was not a part of the firm when the General Reserve was created.

Instead, the General Reserve is transferred to the Old Partners' Capital Accounts, as mentioned in option (d). This ensures that the existing partners are compensated for the increase in their profit-sharing ratio without including the new partner in the distribution of the General Reserve.

Conclusion:
In conclusion, the General Reserve at the time of admission of a partner is transferred to the Old Partners' Capital Accounts. This adjustment is made to compensate the existing partners for the increase in their profit-sharing ratio and is in accordance with the principles of partnership accounting.
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With an aim to check flow of black money and evasion of taxes through stock market, market regulator SEBI has decided to impose hefty penalty on brokers facilitating such transactions from tomorrow. The regulator recently came across a loophole in its existing regulations, which was being abused by stock brokers for facilitating tax evasion and flow of black money through fictitious trades in lieu of hefty commissions. To remove this anomaly, SEBI has asked stock exchanges to penalise the brokers transferring trades from one trading account to another after terming them as ‘punching’ errors. The penalty could be as high as 2% of the value of shares traded in the ‘wrong’ account, as per new rules coming into effect from August 1.In a widely-prevalent, but secretly operated practice, the people looking to evade taxes approach certain brokers to show losses in their stock trading accounts, so that their earnings from other sources are not taxed. These brokers are also approached by people looking to show their black money as earnings made through stock market. In exchange for a commission, generally 5-10% of the total amount, these brokers show desired profits or losses in the accounts of their clients after transferring trades from other accounts, created for such purposes only.The brokers generally keep conducting both ‘buy’ and ‘sell’ trades in these fictitious accounts so that they can be used accordingly when approached by such clients.In the market parlance, these deals are known as profit or loss shopping. While profit is purchased to show black money as earnings from the market, the losses are purchased to avoid tax on earnings from other sources.As the transfer of trades is not allowed from one account to the other in general cases, the brokers show the trades conducted in their own fictitious accounts as ‘punching’ errors. The regulations allow transfer of trades in the cases of genuine errors, as at times ‘punching’ or placing of orders can be made for a wrong client. To check any abuse of this rule, SEBI has asked the bourses to put in place a robust mechanism to identify whether the errors are genuine or not. At the same time, the bourses have been asked to levy penalty on the brokers transferring their non-institutional trades from one account to the other. The penalty would be 1% of the traded value in wrong account, if such trades are up to 5% of the broker’s total non-institutional turnover in a month. The penalty would be 2% of trade value in wrong account, if such transactions exceed 5% of total monthly turnover in a month.Q. What is a ‘punching error as per the passage?

General Reserve at the time of admission of a partner is transferred to ____________ .a)Revaluation Accountb)Capital Accounts of all partners, including new partnerc)None of the thesed)Old Partners Capital AccountCorrect answer is option 'D'. Can you explain this answer?
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