Question

If, at the time of admission, some profit and loss account balance appears in the books, it will be transferred to ______.

Options

• Profit & Loss Adjustment Account

• All partners’ Capital Accounts

• Old partners’ Capital Accounts

• Revaluation Account

Answer 1

If, at the time of admission, some profit and loss account balance appears in the books, it will be transferred to Old partners’ Capital Accounts.

Explanation:

Any accumulated profits or losses existing in the books at the time a new partner is admitted belong exclusively to the original partners. The new partner has no claim on past earnings, so the balance is distributed among the old partners in their old profit-sharing ratio.