If increase in liability is wrongly credited what will be the effect?

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

The direct answer is Option A: if an increase in liability is wrongly credited, profit will appear higher or loss will appear lower. A liability is an amount owed by the firm. If a liability increases, the firm has an additional burden, so the change is a loss and should be debited to Revaluation Account. Suppose a liability rises by ₹8,000. Correct treatment is a debit of ₹8,000. If it is wrongly credited, the account receives the opposite effect: a loss is treated as a gain, so reported profit is overstated, or an actual loss is reduced. Option A is correct. Option B is wrong because the loss would not be correct; it would be misstated. Option C is wrong because the error definitely changes the revaluation result. Option D is wrong because recording a liability does not increase an asset. The mistake affects profit or loss, not the asset balance. Exam cue: increase in asset is credit, but increase in liability is debit.