Question

Which of the following accounts will be debited for transferring loss on revaluation of assets and reassessment of liabilities at the time of admission of a new partner into the partnership firm:

Options

• Old partner's capital accounts in old profit sharing ratio

• Old partners capital accounts in sacrificing ratio

• All partners capital accounts (including incoming partner) in new profit sharing

• Revaluation account

Answer 1

Old partner's capital accounts in old profit sharing ratio

Explanation:

A revaluation account is created to modify the firm's assets and liabilities during restructuring. According to the previous profit-sharing ratio, the resulting profit or loss is moved to the current and capital accounts.