On admission of a new partner to whom is the old reserve credited?

Correct answer: Old partners capital accounts

The correct answer is A: the old reserve is credited to the capital accounts of the old partners. A reserve is an undistributed profit created before admission, so it belongs to the partners who were present when it was earned. The reserve is distributed among them in the old ratio. Option A is correct because their capital accounts increase through the credit. Option B is wrong because the new partner had no right in a pre-admission reserve. Option C is wrong because Revaluation Account records changes in asset and liability values, not distribution of an old reserve. Option D is wrong because no cash is necessarily received or paid; the entry is an internal adjustment. Memory cue: old reserve, old partners, old ratio.