If Profit and Loss debit balance is credited to old partners what is the correct correction?

Correct answer: It should have been debited to old partners

The direct answer is option A: the debit balance should have been debited to the old partners. A Profit and Loss debit balance means accumulated loss. A loss decreases the capital or current account of the partners who bore it. Because this loss relates to the period before admission, the old partners must bear it in their old profit-sharing ratio. Therefore, if it was wrongly credited, the correction is to debit the old partners in that ratio. Option A is correct. Option B is wrong because the new partner did not belong to the firm when the loss arose. Option C is wrong because a loss cannot properly be added to General Reserve. Option D is wrong because there is an accounting error: crediting partners increases their accounts instead of reducing them. Memory cue: debit balance is loss, and loss reduces capital, so debit the responsible old partners.