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If the bank overdraft increases from ₹60,000 to ₹72,000, what entry will be made in the Revaluation Account?

Answer and explanation

Correct answer: Debit ₹12,000

Bank overdraft is a liability. Its increase of ₹12,000 (₹72,000 − ₹60,000) represents a loss to the firm and is debited to the Revaluation Account. Hence, ₹12,000 debit is correct. Exam tip: an increase in a liability is debited to the Revaluation Account, while a decrease is credited.

Related tags

Bank OverdraftLiability RevaluationAsset RevaluationAdmission Of PartnerReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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