At the time of admission of a partner, the Profit and Loss Account has a credit balance of ₹60,000 and the General Reserve is ₹30,000. The old partners share profits in the ratio 2:3:4. How much of these accumulated profits will be credited to the first partner?

Correct answer: ₹20,000

The credit balance of the Profit and Loss Account and the General Reserve are both accumulated profits belonging to the old partners. Total accumulated profits = ₹60,000 + ₹30,000 = ₹90,000. The first partner’s share under the old ratio is \(2/9\), so the amount is ₹90,000 × \(2/9\) = ₹20,000. Option B, ₹30,000, represents the 3/9 share and is therefore the share of the second partner. Exam tip: On admission, accumulated profits are distributed among old partners in their old profit-sharing ratio.