Which item will be credited in Revaluation Account?

Correct answer: Unrecorded asset

The correct answer is C: an unrecorded asset is credited to the Revaluation Account. An unrecorded asset is an asset that exists but was not previously shown in the books. When it is discovered during reconstitution, the firm gains value because it now recognizes an asset. Gains are credited in the Revaluation Account, so Unrecorded Asset Account is debited and Revaluation Account is credited. Option C is correct. Option A, decrease in machinery, is a loss and is debited. Option B, increase in liability, creates an additional obligation and is a loss, so it is debited. Option D, additional provision, generally represents an extra expected loss or liability and is also debited. The basic rule is: increase in an asset and decrease in a liability are gains and are credited; decrease in an asset and increase in a liability are losses and are debited. Memory cue: beneficial changes go to the credit side of Revaluation Account.