Question

What is called accumulated profit?

Hint:

“Accumulated” = \emph{already earned} but \emph{not yet distributed}.

Answer 1

Step 1: Meaning.
Accumulated profits are undistributed earnings standing in the books on the date of reconstitution/dissolution (e.g., General Reserve, Credit balance of P& L, Workmen Compensation Reserve surplus, etc.).
Step 2: Treatment in partnership.
Before admission/retirement/death, these are transferred to partners’ capital accounts in the \emph{old} profit-sharing ratio.
Final Answer: \[ \boxed{\text{Undistributed past profits kept as reserves/balance of P& L}} \] % Quciktip