Partnership

Admission

Easy

common

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

All partner's capital account

New partner's capital account

Old partner's capital account

Neither old nor new partner's account

✅ Correct Option: 3

At the time of admission of a new partner, General Reserve appearing in the old Balance Sheet represents accumulated profits that belong to the old/existing partners only.

Since this reserve was created from profits earned before the new partner joined the firm, the new partner has no claim over it.

Therefore, General Reserve is transferred to the old partners' capital accounts in their old profit-sharing ratio.

Journal Entry:

General Reserve Account ... Dr.

To Old Partners' Capital Accounts (in old ratio)

Example: If A and B are old partners sharing profits equally (1:1) and General Reserve is ₹40,000:

A's Capital A/c will be credited with ₹20,000
B's Capital A/c will be credited with ₹20,000

This ensures that accumulated profits earned before admission are distributed only among those who actually contributed to earning them (i.e., the old partners).

2022: 16 July Shift 2

Identify from the following when goodwill is required to be calculated. Change in profit sharing ratio

A. Change in profit sharing ratio

B. Admission of a partner

C. Dissolution of Partnership firm

D. Amalgamation of partnership firms

E. Preparation of Balance Sheet

Choose the correct answer from the options given below:

2025: 24 May Shift 1

When a new partner is admitted, the increase in the value of the assets is debited to which account?

2026: 13 May Shift 1

Anil and Bharat are partners in a firm with capitals of Rs. 18,00,000 and Rs. 12,00,000 respectively. Normal rate of return is 15% and goodwill calculated at 2 years' purchase of super profits is valued at Rs. 6,00,000. The average profits of the firm would be:

2026: 24 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Amalgamation of partnership firms	(I) Meaning of Goodwill
(B) Nature of Business	(II) Treatment of goodwill
(C) The present value of a firm's anticipated excess earnings	(III) Factor affecting goodwill
(D) When the new Partner brings goodwill in cash	(IV) Need for valuation of goodwill

Choose the correct answer from the options given below:

2026: 12 May Shift 1

In case of admission of a partner, Match List-I with List-II.

List-I	List-II
(A) For Unrecorded Liability	(I) Revaluation A/c Dr. To Asset A/c
(B) For Over-Valuation of Asset	(II) Partners' Capital A/c Dr. To Revaluation A/c
(C) For transferring loss on revaluation	(III) Revaluation A/c Dr. To Liability A/c
(D) For Under-Valuation of Asset	(IV) Asset A/c Dr. To Revaluation A/c

Choose the correct answer from the options given below:

2025: 29 May Shift 2

The steps involved in the calculation of goodwill under the super profit method are:

(A) Calculate goodwill by multiplying the super profit by number of years purchase.

(B) Calculate normal profit.

(D) Calculate super profit.

Choose the correct answer from the options given below:

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

Solution

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