In case of admission of a partner, any accumulated losses appearing in the form of a debit balance of profit and loss account and/or deferred revenue expenditure appearing in the balance sheet of the firm, should be transferred to __________.
In case of admission of a partner, any accumulated losses appearing in the form of a debit balance of profit and loss account and/or deferred revenue expenditure appearing in the balance sheet of the firm, should be transferred to __________.
Solution
✅ Correct Option: 1
Losses accumulated before admission belong to the period when only the old partners were in business, so the incoming partner cannot be burdened with them. They are written off by debiting the old partners' capital accounts in their old profit sharing ratio and crediting the Profit and Loss Account or deferred revenue expenditure.
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