Question

In case of admission of a partner, the entry for unrecorded investments will be:

Options

• Debit Partners Capital A/c and Credit Investments A/c

• Debit Revaluation A/c and Credit Investment A/c

• Debit Investment A/c and Credit Revaluation A/c

• None of the above

Answer 1

Debit Investment A/c and Credit Revaluation A/c

Explanation:

An unrecorded investment is a newly found asset for the business. When recording it:

1. The Investment A/c is Debited to bring the new asset onto the books (Debit what comes in/increase in asset).
2. The Revaluation A/c is Credited because recognizing this asset is a gain or profit for the firm at the time of admission (Credit all incomes and gains).