Question

State Whether the following Statement is True or False:

Unrecorded assets are recorded in existing partners' capital accounts.

Answer 1

The statement is false.

Explanation:

Unrecorded assets are first recorded through the Revaluation Account, and the resulting profit or loss on revaluation is then transferred to the existing partners' capital accounts in their old profit-sharing ratio. The assets themselves are not recorded directly in the partners' capital accounts.