What is the purpose of revaluing assets on the admission of a partner?

Correct answer: To show correct current values

The governing concept is that admission of a partner changes the relationship among the partners, so assets and liabilities should reflect their appropriate current values before the new profit-sharing arrangement begins. Revaluation identifies the profit or loss arising from changes in those values. That result belongs to the old partners because it accrued before admission. Therefore, option A is correct: the purpose is to present assets at their correct revised or current values and to distribute the resulting revaluation gain or loss fairly. Paying salaries, increasing a bank loan, and closing a sales account are unrelated objectives and do not explain the function of the Revaluation Account.