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Assertion (A): At the time of admission of a partner if there is any General Reserve, Reserve Fund or the balance of Profit & Loss Account appearing in the balance sheet, -

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Question

Assertion (A): At the time of admission of a partner if there is any General Reserve, Reserve Fund or the balance of Profit & Loss Account appearing in the balance sheet, it should be transferred to old partners' capital/current accounts in their old profit sharing ratio.

Reason (R): The General reserve, Reserve Fund or the Balance of Profit and Loss Account are the result of the past profits when the new partner was not admitted.

Options

  • Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

  • Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

  • Assertion (A) is true, but Reason (R) is false.

  • Assertion (A) is false, but Reason (R) is true.

MCQ

Solution

Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

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Admission of a Partner - Revaluation of Assets and Liabilities
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