Why does the new partner not receive a share of the old General Reserve?

Correct answer: Because it was earned before admission

The governing principle is that accumulated profits and reserves existing before admission belong to the partners who earned them during the earlier period. A new partner becomes entitled to future profits from the date of admission, but does not automatically acquire rights in past profits. Therefore, the old General Reserve is distributed among the old partners in their old profit-sharing ratio before the new ratio is applied. Option A correctly identifies the timing of the earning. Whether the reserve is held in cash is irrelevant, because a reserve represents an accounting accumulation of profit. The new partner may contribute capital or goodwill, but that does not create a right to an old reserve.