Which account is debited when the credit balance of the Profit and Loss Account is closed on admission?

Correct answer: Profit and Loss Account

The governing rule for closing a credit balance is based on the normal balance of the account. A credit balance in the Profit and Loss Account represents accumulated profit. To transfer or close that balance, the Profit and Loss Account itself is debited, while the old partners’ Capital or Current Accounts are credited in their old profit-sharing ratio. Thus, option A is correct. The old partners’ accounts receive the benefit and are credited, not debited. The new partner has no claim over profit earned before admission, so the new partner’s Capital Account is not used. Cash is also unaffected because this is a book adjustment, not a cash transaction.