Accumulated profits were wrongly distributed in the new ratio. Why is this wrong?

Correct answer: Because they are old profits of old partners

The correct answer is A: accumulated profits belong to the old partners. These profits were earned before the new partner entered. Therefore, they must be transferred to the old partners in their old profit-sharing ratio. The new ratio applies only to profits earned after admission. Option A is correct because it identifies both the time and ownership of the profit. Option B is wrong because the new partner did not contribute to earlier profits. Option C is wrong because accumulated profit is not a cash expense; it is a retained earning or reserve. Option D is wrong because it is not money borrowed from outsiders. Remember: pre-admission profits go to old partners in the old ratio.