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At the time of admission of a partner, machinery is decreased by ₹9,000 and creditors are decreased by ₹3,000 in the revaluation. What will be the net result of revaluation?

Answer and explanation

Correct answer: ₹6,000 loss

A decrease in the value of machinery by ₹9,000 is a loss in the Revaluation Account. A decrease in creditors by ₹3,000 is a gain because the liability has reduced. Therefore, net loss = ₹9,000 − ₹3,000 = ₹6,000. Exam tip: a decrease in an asset is a loss, whereas a decrease in a liability is a gain.

Related tags

Asset RevaluationAdmission Of PartnerRevaluation AccountNet LossAccountancyReconstitution Admission Of A PartnerClass 12 Mcq

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