If an omitted expense of a prior period is discovered, what effect does it have on the partners' accounts?

Correct answer: Debit in profit sharing ratio

An omitted expense reduces the profit of the earlier period. The correct adjustment is to debit the partners’ accounts (or their capital accounts) in the profit‑sharing ratio to reflect the reduced profit. Credit will be to cash/bank only if the expense is actually paid now. Option A is wrong because crediting partners would incorrectly increase profit; option D is wrong because adjustments follow the agreed profit‑sharing ratio, not equal shares unless the ratio is equal. Exam tip: Adjust prior period omissions through partners’ accounts in the profit ratio; if the expense is paid now, credit cash/bank accordingly.