If decrease in liability is wrongly debited what will be the effect on revaluation result?

Correct answer: Profit will be lower or loss will be higher

The correct answer is A: profit will be lower or loss will be higher. A decrease in liability is actually a gain because the firm’s obligation becomes smaller. It should be credited to the Revaluation Account. If it is wrongly debited, a gain is treated as a loss. This reduces the calculated profit by the amount of the item; if the account was already showing a loss, the loss becomes larger. Option A is correct. Option B is wrong because the incorrect debit changes the balance and cannot leave profit always correct. Option C is wrong because every wrong debit affects the Revaluation Account result. Option D is wrong because this accounting error does not directly increase goodwill; goodwill is determined separately according to the agreed valuation method. For example, if liability decreases by ₹5,000, correct treatment adds ₹5,000 to credit, but wrong treatment adds ₹5,000 to debit, creating a total error of ₹10,000 in the reported result. Remember: liability reduction is a gain and must be credited.