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Class 12AccountancyReconstitution - Admission of a PartnerAsset RevaluationHard
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A and B share profits in the old ratio of 4:1. The Revaluation Account shows a loss of ₹25,000. What will be the effect on A’s Capital Account?

Answer and explanation

Correct answer: Debit ₹20,000

A revaluation loss is debited to the partners’ Capital Accounts in the old profit-sharing ratio. A’s share is ₹25,000 × 4/5 = ₹20,000; therefore, A’s Capital Account is debited by ₹20,000. ₹5,000 is B’s share, and a loss causes a debit, not a credit. Exam tip: Credit revaluation profit and debit revaluation loss in the old ratio.

Related tags

Revaluation LossOld Profit Sharing RatioCapital AccountPartner AdmissionAsset RevaluationReconstitution Admission Of A PartnerAccountancyClass 12 Mcq
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10 more MCQs
  1. 1Why are assets revalued at the time of admission of a partner?
  2. 2On which side of Revaluation Account is an increase in asset value recorded?
  3. 3On which side of Revaluation Account is a decrease in asset value recorded?
  4. 4Among which partners is revaluation profit distributed?
  5. 5In which ratio is revaluation loss shared?
  6. 6If machinery value is increased from ₹50000 to ₹60000 then how much will be credited to Revaluation Account?
  7. 7If the value of furniture is reduced from ₹30,000 to ₹24,000, what will be the effect in the Revaluation Account?
  8. 8What is the entry when an unrecorded asset is found?
  9. 9What is the entry when an unrecorded liability is found?
  10. 10If a new provision for doubtful debts is created on debtors then what is the effect on Revaluation Account?
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