Question

By distributing credit balance of profit and loss account appearing in the balance sheet at the time of retirement of a partner, capital/ current accounts of partners will: *​

Answer 1

Answer:

Sometimes a firm may have undistributed reserves and profits yet to be transferred to the partner's capital accounts, for example, general reserve. At the time of admission of a partner, these reserves are distributed to the partner's capital accounts in their old profit sharing ratio. The partner's capital account is credited with his share of the reserve.