Question

Profit and loss on revaluation of assets is transferred to partner's capital account in which ratio?

• A. Equally ratio.
• B. Profit sharing ratio.
• C. Fixed capital ratio.
• D. Current capital ratio.

Answer 1

The correct option is B Profit sharing ratio.

A revaluation A/c is opened for the purpose of revaluing assets and liabilities.

This account is debited with all reduction in the value of assets and increase in liabilities and credited with increase in the value of assets and liabilities. The difference in the two sides is revaluation profit or loss. This profit and loss is transferred to current capital accounts of old partners in old profit sharing ratio.