Assertion (A): Ajay and Akansha are partners sharing profits in the ratio of 3 : 2. General Reserve existed in the books at ₹ 1,00,000. They admitted Amit as a partner for 2/5th share in profits. ₹ 50,000 was transferred to Workmen Compensation Reserve and the balance was transferred to the Capital Accounts of Ajay and Akansha in the ratio of 3 : 2.
Assertion (A): Ajay and Akansha are partners sharing profits in the ratio of 3 : 2. General Reserve existed in the books at ₹ 1,00,000. They admitted Amit as a partner for 2/5th share in profits. ₹ 50,000 was transferred to Workmen Compensation Reserve and the balance was transferred to the Capital Accounts of Ajay and Akansha in the ratio of 3 : 2.
Reason (R): General Reserve is a free reserve and can be used for any purposes as is decided by the partners. The partners may transfer ₹ 50,000 to Workmen Compensation Reserve and transfer the balance ₹ 50,000 to the Capital Accounts of Ajay and Akansha in the ratio of 3 : 2.
In the context of above two statements, which of the following is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(b) Assertion (A), and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is correct but the Reason (R) is not correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Anurag Pathak Changed status to publish June 8, 2023
Ans – a)
Explanation:-
General Reserve can be used for any purpose. Thus, the amount can be transferred to Workmen Compensation Reserve and rest is distributed to old partners in old ratio as it is part of past profits.
Anurag Pathak Changed status to publish June 8, 2023
