At the time of admission of a new partner, if the Revaluation Account shows a profit and it is credited to the old partners’ Capital Accounts, what will be the effect on their capital?

Correct answer: The old partners’ capital will increase

A revaluation profit belongs to the old partners and is credited to their Capital Accounts in their old profit-sharing ratio. A credit increases the balance of a Capital Account, so their capital increases. Exam tip: add a revaluation profit to capital and deduct a revaluation loss from it.