All Courses
Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity Get the App Login Join for Free
Sign in Open App
Class 12 Exam  >  Class 12 Questions  >  General Reserve at the time of admission of a... Start Learning for Free
SaveJoin the Discussion on the App
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?
FREE This question is part of
Download PDF Attempt Test
Download PDF Attempt this Test
Most Upvoted Answer
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.
Free Test
FREE
Start Free Test
Start Free Test
Community Answer
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.
< Previous Question Next Question >
Explore Courses for Class 12 exam

Similar Class 12 Doubts

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?
Question Description
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? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about 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? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 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?.
Solutions for 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? in English & in Hindi are available as part of our courses for Class 12. Download more important topics, notes, lectures and mock test series for Class 12 Exam by signing up for free.
Here you can find the meaning of 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? defined & explained in the simplest way possible. Besides giving the explanation of 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?, a detailed solution for 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? has been provided alongside types of 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? theory, EduRev gives you an ample number of questions to practice 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? tests, examples and also practice Class 12 tests.
Explore Courses for Class 12 exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Get App
© EduRev
Education Revolution
Follow Us
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup