Question

Profit or loss on revaluation is shared among the partners in ________.

• A. old profit sharing
• B. new profit sharing
• C. capital
• D. equal

Answer 1

Answer: (A)

old profit sharing

A revaluation account 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 decrease in the value of liabilities. The difference in two sides of account will show profit and loss. This is transferred to the capital account of old partners in the old profit sharing ratio.