Which of the following is an item of accumulated profit?

Correct answer: General Reserve

Accumulated profit means profit retained in the business instead of being distributed to partners. A General Reserve is created by transferring part of earned profit to a reserve, so it is a clear example of accumulated profit. It is distributed among the old partners in their old ratio when required at reconstitution. In contrast, a debit balance of the Profit and Loss Account represents an accumulated loss. Advertisement suspense expenditure and preliminary expenses are deferred or unadjusted expenses, not profits. They are normally written off or adjusted against partners’ accounts according to the applicable accounting treatment. Therefore, only option A fits the definition.