At the time of admission the general reserve shown in old balance sheet relates to which period?

Correct answer: Period before admission

A General Reserve shown in the balance sheet at the time of admission represents profits retained from earlier accounting periods. Those profits were earned before the incoming partner became a member of the firm. Consequently, the reserve relates to the period before admission and belongs to the old partners, who normally receive it in their old profit-sharing ratio. Option A is therefore correct. It cannot ordinarily relate to the period after admission because the reserve already exists when the new partner enters. It also cannot belong only to the new partner or to the next financial year, since neither period had generated the reserve at the admission date. The distinction is important because future profits are divided in the new ratio, whereas old reserves are settled with the old partners.