Which item comes under accumulated profit?

Correct answer: General Reserve

The direct answer is option A: General Reserve is an accumulated profit. A general reserve is created by setting aside part of the firm’s profit and retaining it in the business. When a new partner is admitted, a reserve created before admission belongs to the old partners, so it is credited to their capital or current accounts in the old profit-sharing ratio. Option A is correct because it represents retained profit. Option B is wrong because a Profit and Loss debit balance means accumulated loss, not profit; it reduces old partners’ capital when distributed. Option C is wrong because Advertisement Suspense is a deferred or fictitious asset-type debit balance, generally treated as an accumulated loss or expense to be written off, not as profit. Option D is wrong because Preliminary Expenses are expenses not yet fully written off and are not accumulated profits. Step by step: ask whether the item arose from profit; General Reserve does; therefore classify it as accumulated profit; then distribute it among old partners in the old ratio. The new partner does not receive a share of this pre-admission reserve. Memory cue: reserve on the credit side usually signals saved profit; debit balances such as P&L debit, suspense, and preliminary expenses are not profits.