When accumulated profit or a general reserve is distributed among the old partners, on which side are the old partners’ capital accounts recorded?

Correct answer: Credit side

Accumulated profit or a reserve represents profit earned for the old partners. When it is distributed in the old profit-sharing ratio, each old partner’s capital or current account increases, so these accounts are credited. The debit side would indicate a reduction or loss, not the distribution of accumulated profit. Exam tip: Profit or reserve transferred to old partners is credited to their capital or current accounts.