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Treatment in Partner's Capital Account-Change in PSR

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Question

After distribution of General Reserve in Partners' Capital Account, will it be shown under balance sheet?

A

Can't say

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B

no, it will not be shown in the balance sheet.

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C

yes, it will be shown in the balance sheet

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Solution

The correct option is B
no, it will not be shown in the balance sheet.

After the distribution of the General Reserve in Partners' Capital Account, it will be removed from the balance sheet.

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After transferring the general reserve to partners' capital account, will it be shown in the balance sheet?

Q. X and Y are partners sharing profits in the ratio of 2:1. On 31st March, 2018 their Balance Sheet showed General Reserve of Rs. 60,000. It was decided that in future they will share profits and losses in the ratio of 3:2. Pass necessary Journal entry in each of the following alternative cases:-
(i) If General Reserve is not be shown in the new Balance Sheet.
(ii) If General Reserve is to be shown in the new Balance Sheet.

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(i) If General Reserve is not to be shown in the new Balance Sheet .
(ii) If General Reserve is to be shown in the new Balance Sheet .

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Q. On retirement of a partner, goodwill appears in the balance sheet , it will be written-off by debiting the capital accounts of partners.

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