Reserves

Correct answer: A. ₹27,000 credit

The General Reserve is distributed as a credit, while the debit balance in the Profit and Loss Account is distributed as a loss. The net amount is ₹1,20,000 − ₹30,000 = ₹90,000. B’s share in the old ratio is 3/10, so B’s account is credited by (3/10) × ₹90,000 = ₹27,000.

Correct answer: A. ₹9,333 लगभग

The claim exceeds the reserve by ₹1,00,000 − ₹84,000 = ₹16,000. This additional loss is borne by the old partners in their ratio of 7:5. Therefore, the first partner’s share is ₹16,000 × 7/12 = ₹9,333.33, or approximately ₹9,333. ₹16,000 represents the total excess claim, not the first partner’s share. Exam tip: first calculate the excess claim over the reserve and then distribute it in the old profit-sharing ratio.

Correct answer: B. ₹9857

Investment loss is ₹33000 so distributable balance is ₹23000. Second partner share is ₹23000 × 3/7 = about ₹9857.

Correct answer: A. Debit Capital Reserve and credit Preliminary Expenses then credit balance to old partners

Capital Reserve is profit and Preliminary Expenses are loss to be written off. Net profit ₹27000 is credited to old partners in old ratio.

Correct answer: A. New partner may indirectly get share in old profit

General Reserve is profit earned before admission. If not distributed the new partner may get an unfair share in old profit.

Correct answer: A. ₹7,000 credit

The debit balance of Advertisement Suspense must be deducted from the accumulated profit. Thus, net accumulated profit = ₹72,000 − ₹30,000 = ₹42,000. Since the total profit-sharing ratio is 6, C’s share is 1/6. Therefore, C’s share is ₹42,000 × 1/6 = ₹7,000 credit. ₹12,000 is incorrect because it ignores the Advertisement Suspense debit balance. Exam tip: Deduct debit balances from credit reserves before distributing the net amount among the partners.

Correct answer: A. ₹18,750

The claim of ₹45,000 must first be adjusted against the Workmen Compensation Reserve. Thus, the distributable balance is ₹1,20,000 − ₹45,000 = ₹75,000. The total ratio is 5 + 4 + 3 = 12, so the third partner’s share is ₹75,000 × 3/12 = ₹18,750. ₹25,000 is incorrect because it does not apply the third partner’s 3/12 share to the distributable balance. Exam tip: deduct the claim from the reserve first, and distribute only the balance in the old profit-sharing ratio.

Correct answer: A. ₹5,400

The excess of actual bad debts over the reserve is ₹41,000 − ₹32,000 = ₹9,000. This loss is borne by the old partners in their ratio of 3:2. Therefore, the debit to the first partner is ₹9,000 × 3/5 = ₹5,400. ₹9,000 is the total excess loss, not the first partner’s share. Exam tip: When actual bad debts exceed the reserve, distribute only the excess among the old partners in their old ratio.

Correct answer: A. General Reserve accumulated profit

General Reserve is accumulated profit. Profit and Loss debit balance and Preliminary Expenses are debited to old partners.

Correct answer: A. Old partners current accounts

Under fixed capital method adjustments are made in current accounts. Old accumulated profits are credited to old partners current accounts.

Correct answer: A. Old partners capital accounts will be debited

Advertisement Suspense is a fictitious asset and is treated as loss when written off. Under fluctuating capital method the loss is debited directly to old capital accounts.

Correct answer: A. ₹48,000

Both reserves represent accumulated profits of the old partners, so their total is ₹70,000 + ₹42,000 = ₹1,12,000. B’s share in the old ratio is 3/7. Therefore, the amount credited to B is ₹1,12,000 × 3/7 = ₹48,000. Exam tip: On admission, distribute existing reserves among the old partners in their old profit-sharing ratio unless the question gives a different instruction.

Correct answer: C. ₹8,182

The probable liability exceeds the reserve by ₹1,10,000 − ₹92,000 = ₹18,000. This excess loss is borne by the old partners in their 6:5 ratio. Therefore, the second partner’s share is ₹18,000 × 5/11 = ₹8,181.82, or approximately ₹8,182. ₹18,000 is the total excess loss, not the second partner’s share. Exam tip: First calculate the liability exceeding the reserve, then distribute that excess in the old profit-sharing ratio.

Correct answer: A. Full reserve is distributed among old partners and increase is separate gain

Increase in investment is gain and the reserve also belongs to old partners. Both are adjusted among old partners in old ratio.

Correct answer: A. ₹20,000

The credit balance of the Profit and Loss Account and the General Reserve are both accumulated profits belonging to the old partners. Total accumulated profits = ₹60,000 + ₹30,000 = ₹90,000. The first partner’s share under the old ratio is \(2/9\), so the amount is ₹90,000 × \(2/9\) = ₹20,000. Option B, ₹30,000, represents the 3/9 share and is therefore the share of the second partner. Exam tip: On admission, accumulated profits are distributed among old partners in their old profit-sharing ratio.

Correct answer: A. It will continue as outside liability

Employees Provident Fund is liability towards employees. It is not distributed among partners as accumulated profit.

Correct answer: A. Reserve should go only to A and B in old ratio

General Reserve is part of old profit. It should be distributed only among old partners in old profit ratio.

Correct answer: A. ₹30000

Known bad debts are first deducted from the reserve. Remaining ₹30000 is distributed among old partners in old ratio.

Correct answer: A. ₹10,000 debit

The General Reserve is credited to the old partners in their old profit-sharing ratio, so C receives a credit of ₹50,000 × 5/10 = ₹25,000. The debit balance of the Profit and Loss Account is also transferred in the old ratio, giving C a debit of ₹70,000 × 5/10 = ₹35,000. Therefore, the net effect is ₹35,000 debit − ₹25,000 credit = ₹10,000 debit. ₹35,000 represents only C’s share of the loss and ignores the reserve credit. Exam tip: calculate the reserve credit and the debit-balance loss separately before finding the net effect.

Correct answer: A. उपार्जन पुराने काल में हुआ, इसलिए पुराने साझेदारों को अधिकार है

The governing principle is the time-based entitlement to partnership profits. A reserve is created out of profits earned before the admission or reconstitution of a partner. Since the old partners owned and shared the business during that earlier period, the reserve belongs to them and must be credited to their capital or current accounts in the old profit-sharing ratio. Its presentation on the liabilities side does not make it an outside liability; it is an internal claim of the partners. The new partner is entitled only to profits earned after admission, and the new ratio governs future profits rather than past reserves. Therefore option A states the correct accounting basis.

Correct answer: A. ₹28200

Distributable amount is ₹75000 - ₹28000 = ₹47000. First partner share is ₹47000 × 9/15 = ₹28200.

Correct answer: A. ₹29000

The direct answer is ₹29,000, option A. Both reserves are first combined, and the investment loss is then deducted. Total available amount = ₹66,000 + ₹33,000 − ₹12,000 = ₹87,000. The old partners share this amount in the ratio 2:1, so total parts are 3. The second partner receives one part: ₹87,000 ÷ 3 = ₹29,000. Option A is correct. Option B, ₹33,000, is the second partner’s one-third of the original total reserves before deducting the loss, so it ignores the adjustment. Option C, ₹22,000, is one-third of the Investment Fluctuation Reserve, not the final distributable amount. Option D, ₹87,000, is the total amount for both partners, not the second partner alone. Always calculate the common distributable total first, then divide according to the ratio.

Correct answer: A. Accumulated profit is mistaken as revaluation profit

Profit and Loss credit balance is accumulated profit. It is distributed directly among old partners in old ratio.

Correct answer: A. To keep old rights and obligations limited to old partners

These items belong to the period before admission and relate to old partners. Therefore the new partner is kept separate from them.

Correct answer: A. ₹24,000

The accumulated loss must first be adjusted against the General Reserve, leaving a net amount of ₹1,00,000 − ₹20,000 = ₹80,000. This amount is distributed among the old partners in the ratio 6:3:1. B’s share is ₹80,000 × 3/10 = ₹24,000, so B’s Capital Account is credited with ₹24,000. Exam tip: Always calculate the net reserve after adjusting accumulated losses before applying the old profit-sharing ratio.