Question

On retirement or death of a partner, the existing profit and loss a/c and reserve a/c is transferred to ____________.

• A. Debt side of all partners capital a/c
• B. Credit side of all partners capital a/c
• C. Debit side of remaining partners capital a/c
• D. Credit side of remaining partnership capital a/c

Answer 1

The correct option is B Credit side of all partners capital a/c

At the time of retirement of a partner, if there exist any reserve or accumulated profit in the books of the firm, they should be transferred to the old partner's capital/current accounts in the old profit sharing ratio, because these items belongs to the old partners.

In the same manner, old partner's capital/current accounts should be debited in the old ratio if any accumulated loss appears in the asset side of the balance sheet.