The accumulated profits and reserves are transferred to: Option 1: Bank Account Option 2: Partners' Capital Accounts Option 3: Realisation Account Option 4: Partners' Loan Accounts

Answer: Partners' Capital Accounts. Solution: Accumulated profits and reserves represent undistributed earnings that belong to the partners. These are shown on the liabilities side of the balance sheet. During dissolution or reconstitution of a partnership firm, these accumulated profits and reserves need to be distributed among the partners as they are the rightful owners of these earnings. Transfer Entry: Partners' Capital Accounts are credited with their respective shares of accumulated profits and reserves in their profit-sharing ratio. Journal Entry:, Particulars, L.F., Debit (₹), Credit (₹), Accumulated Profits/Reserves A/c, Dr., XXX, To Partners' Capital Accounts, XXX, (Being accumulated profits/reserves transferred to partners' capital accounts in their profit-sharing ratio), Why not other options: Realisation Account is used only for recording assets sold and liabilities paid during dissolution. Since accumulated profits are not assets but represent partners' share in profits, they don't pass through the Realisation Account. Bank Account is a cash/bank entry, whereas transfer of reserves is an internal adjustment between capital accounts. Partners' Loan Accounts are used when partners give loans to the firm or take loans from it, not for distributing profits.

Partnership

Admission

Easy

common

The accumulated profits and reserves are transferred to:

Bank Account

Partners' Capital Accounts

Realisation Account

Partners' Loan Accounts

✅ Correct Option: 2

Accumulated profits and reserves represent undistributed earnings that belong to the partners. These are shown on the liabilities side of the balance sheet.

During dissolution or reconstitution of a partnership firm, these accumulated profits and reserves need to be distributed among the partners as they are the rightful owners of these earnings.

Transfer Entry:

Partners' Capital Accounts are credited with their respective shares of accumulated profits and reserves in their profit-sharing ratio.

Journal Entry:

Particulars	Debit (₹)	Credit (₹)
Accumulated Profits/Reserves A/c	Dr.	XXX
To Partners' Capital Accounts		XXX
(Being accumulated profits/reserves transferred to partners' capital accounts in their profit-sharing ratio)

Why not other options:

Realisation Account is used only for recording assets sold and liabilities paid during dissolution. Since accumulated profits are not assets but represent partners' share in profits, they don't pass through the Realisation Account.

Bank Account is a cash/bank entry, whereas transfer of reserves is an internal adjustment between capital accounts.

Partners' Loan Accounts are used when partners give loans to the firm or take loans from it, not for distributing profits.

2025: 4 June Shift 2

Arrange the steps in the correct sequence while calculating goodwill by capitalization of average profit method:

(A) Ascertain the actual firm's capital (net assets)

(B) Compute the value of goodwill

(D) Ascertain the average profits

Choose the correct answer from the options given below:

2025: 30 May Shift 1

At the time of admission of a new partner, general reserve appears in the old balance sheet is transferred to:

2026: 31 May Shift 1

Shubham and Gill are partners in a firm sharing profits in the ratio of 5:3. They admit Hardik as a new partner for 1/7 share in the profit. The new profit sharing ratio will be 4:2:1. What will be the sacrificing ratio of Shubham and Gill?

2025: 3 June Shift 1

The journal entries recorded for revaluation of assets and reassessment of liabilities are given here, find the correct :

(A) For increase in the value of an asset

Asset A/c Dr.

To Revaluation A/c

(B) For reduction in the value of an asset

Revaluation A/c Dr.

Asset A/c

Liability A/c Dr.

To Revaluation A/c

(D) For recording in the amount of a unrecorded liability

Revaluation A/c Dr.

To Liability A/c

Choose the correct answer from the options given below:

2022: 16 July Shift 2

Sometimes the value of Goodwill is not given at the time of admission/retirement of a partner. In such a situation, it has to be inferred from capital and profit sharing ratio. such Goodwill is called

2022: 20 July Shift 1

Match List - I with List - II.

List - I	List - II
(a) Building undervalued	(i) Credited to Partner's Capital Account
(b) Building overvalued	(ii) Credited to Revaluation Account
(c) Capital withdrawn	(iii) Debited to Revaluation Account
(d) Additional capital introduced	(iv) Debited to Partner's Capital Account

Choose the correct answer from the options given below :

The accumulated profits and reserves are transferred to:

Solution

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