At the time of admission of a new partner, how is accumulated profit or general reserve recorded in the old partners’ capital accounts?

Correct answer: Credited in the old profit-sharing ratio

Accumulated profit or general reserve is income already earned by the firm, so it increases the old partners’ capital balances. It is distributed in the old profit-sharing ratio, and the respective capital accounts are credited. The Revaluation Account is used for gains or losses arising from changes in the values of assets and liabilities, not for distributing reserves. Exam tip: Distribute reserves existing before admission among the old partners in their old ratio.