On the admission of a new partner, an environmental compensation liability of ₹62,000 is estimated, although it was not previously recorded in the firm's books. What will be its effect on the Revaluation Account?

Correct answer: Debit Revaluation Account by ₹62,000

Recognising a previously unrecorded liability increases the firm's liabilities and creates a revaluation loss. Therefore, the Revaluation Account is debited by ₹62,000 and the related liability account is credited. Option A is incorrect because an unrecorded liability represents a loss, not a gain. Exam tip: For an unrecorded liability, the usual entry is Revaluation Account Dr. To Liability Account.