Profit and Loss debit balance ₹33000 was left in the new balance sheet. If there was no special instruction what was the correct treatment?

Correct answer: Debit old partners in old ratio

The direct answer is option A: debit the old partners in their old ratio. A debit balance of Profit and Loss Account represents an accumulated loss. This loss arose before the new partner was admitted, so it belongs to the old partners, not the new partner. The balance of ₹33,000 should therefore be transferred to the old partners’ capital or current accounts by debiting them in the old profit-sharing ratio. Option A is correct. Option B, crediting the new partner, is wrong because the loss existed before admission. Option C, adding it to General Reserve, is wrong because a debit balance is a loss, not a reserve or profit. Option D, debiting Bank, is wrong because no cash payment is involved; this is an internal adjustment between accounts. Memory cue: old loss means debit old partners; old profit means credit old partners.