What does a credit balance of Revaluation Account show?

Correct answer: Revaluation profit

Direct answer: A credit balance of the Revaluation Account means a revaluation profit, so option A is correct. Revaluation records increases or decreases in assets and liabilities at the time of reconstitution. Asset increases and liability decreases are credited because they create gains; asset decreases and liability increases are debited because they create losses. If the credit total is greater than the debit total, the difference is a profit. This profit is transferred to the old partners’ capital or current accounts in their old profit-sharing ratio. Option B is wrong because a debit balance, not a credit balance, represents revaluation loss. Option C is unrelated: cash shortage is a separate adjustment. Option D is also unrelated because a new partner’s capital is recorded in the partner’s capital account, not represented by the revaluation balance. Exam cue: credit excess means gain; debit excess means loss.