Question

State whether Revaluation Account is debited or credited to record the increase 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. An increase in the amount of creditors is recorded by debiting the revaluation account because it is a loss for the firm.