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Question
Balance in revaluation account is transferred to old partners in ________________.
Balance in revaluation account is transferred to old partners in ________________.
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Solution
The correct option is B Old profit sharing ratio
b' Revaluation account increase in the assets and decrease in its liabilities is credited because it is gain,and decrease in the value of assets and increase in its liabilities is debited because it is a loss,unrecorded assets are credited, and unrecorded liabilities are debited.
If the account finally shows a credit balance then it indicates net gain and if there is a debit balance then it indicates the net loss. Profit or loss will be transferred to the capital accounts of the old partners in old ratio.
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b'
Revaluation account increase in the assets and decrease in its liabilities is credited because it is gain,and decrease in the value of assets and increase in its liabilities is debited because it is a loss,unrecorded assets are credited, and unrecorded liabilities are debited.
If the account finally shows a credit balance then it indicates net gain and if there is a debit balance then it indicates the net loss. Profit or loss will be transferred to the capital accounts of the old partners in old ratio.
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