wiz-icon
MyQuestionIcon
MyQuestionIcon
14
You visited us 14 times! Enjoying our articles? Unlock Full Access!
Question

When the general reserve is distributed between all the partner's, then account is debited and account is credited.

A
accumulated profits
No worries! We‘ve got your back. Try BYJU‘S free classes today!
B
general reserve
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
C
goodwill
No worries! We‘ve got your back. Try BYJU‘S free classes today!
D
bank
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
Solution

The correct option is B general reserve
When general reserve is distributed between partner's, then the general reserve account is debited and all the partner's capital account is credited.

In case of retirement of a partner, we need to transfer the reserves or accumulated profits and losses appearing in the balance sheet to the old partners capital accounts.

Since all reserves showing in the balance sheet on the date of retirement are earned by all partners. Therefore, we transfer them to all partners' capital accounts in the old profit sharing ratio.


flag
Suggest Corrections
thumbs-up
2
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Retirement of a Partner - II
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon