Question

State whether Revaluation Account is debited or credited to record the decrease in the amount of creditors.

Answer 1

At the time of admission of a new partner, all liabilities are reassessed to ascertain that they are recorded in the books at their current values. Any gain or loss from such revaluation is transferred to the revaluation account. A decrease in the amount of creditors in recorded by crediting the revaluation account since it is a profit for the firm.