Accumulated profits are transferred to capital account in ______ratio.

old profit sharing ratio

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

new profit sharing ratio

No worries! We‘ve got your back. Try BYJU‘S free classes today!

sacrifice ratio

No worries! We‘ve got your back. Try BYJU‘S free classes today!

gain ratio

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A old profit sharing ratio
When a new partner is being admited into the firm, then before his admission all the existing reserves or accumulated profits in the books of the firm should be transferred to Old Partners in capital/current accounts in the old profit sharing ratio, because these items belong to the old partners and not to the new partner.

Suggest Corrections

Similar questions

Q. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R).

Assertion (A) - Any reserves or accumulated profits/losses appearing in the balance sheet should be transferred to the partner’s capital accounts in an old ratio.

Reason (R) - Accumulated profits/losses appear in the balance sheet after a change in profit-sharing ratio.

[0.88 marks]

Q. Old profit sharing ratio minus new profit sharing ratio is equal to _______________.

Q. Consider the following statements :
1. At the time of admission of new partner undistributed profit or losses are distributed to all partners in new ratio.
2. Profit or loss on revaluation of assets and liabilities is transferred to old partner's capital account in old profit sharing ratio.
3. Goods brought in by incoming partner in cash for joining in a partnership firm is taken away by the old partner's in their new profit-sharing ratio.
Which of the above statement/s is/are true ?

Why is Reserves and Surplus credited to the old Partners' Capital Accounts in their old profit sharing ratio at the time of admission of a partner?

A, B and C are partners sharing profits in the ratio of 2 : 2 : 1. A retires and after all adjustments relating to revaluation, goodwill and accumulated profits the capital account of B showed a credit balance of Rs 1,40,000 and that of C Rs 1,00,000. It was decided to adjust the capitals of B and C in their profit sharing ratio. Calculate the new capitals of the partners and record necessary entry for bringing in or withdrawing cash.

Join BYJU'S Learning Program