Assertion (A): General Reserve is not distributed among the old partners but is carried forward in the Balance Sheet prepared after the admission of a partner.
Assertion (A): General Reserve is not distributed among the old partners but is carried forward in the Balance Sheet prepared after the admission of a partner.
Reason (R): General Reserve is set aside out of past profits and therefore, it is distributed among old partners in their old profit-sharing ratio.
In the context of the above two statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A).
(b) Both, Assertion (A), and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(c) Only Assertion (A) is correct.
(d) Assertion (A) is not correct but the Reason (R) is correct.
Anurag Pathak Changed status to publish June 8, 2023
Ans – d)
Explanation:-
The General Reserve is part of the past profits and past profits belong to old partners in their profit sharing ratio. Thus if no further information is given the general reserve is credited to old partners in their old profit-sharing ratio.
Anurag Pathak Changed status to publish June 8, 2023
