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Question
On revaluation, the increase in the value of assets leads to _________.
Options
Gain
Loss
Expense
None of these
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Solution
On revaluation, the increase in the value of assets leads to Gain.
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RELATED QUESTIONS
Anil and Sunil were partners sharing profits and losses in the ratio of 2:1 respectively. Their Balance Sheet was as follows:
| Balance Sheet as on 31st March 2010 | |||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital A/c | Cash at Bank | 4,000 | |
| Anil | 24,000 | Debtors | 15,000 |
| Sunil | 16,000 | Stock | 23,500 |
| Trade Creditors | 26,000 | Furniture | 5,000 |
| Anil’s Loan A/c | 6,500 | Building | 25,000 |
| 72,500 | 72,500 | ||
On 1st April 2010, Ram is admitted in the partnership on the following terms:
(1) Ram should bring in cash of Rs. 12,000 as capital for 1/5th share in future profit.
(2) Goodwill A/c is raised in the books of the firm for Rs. 4,500.
(3) A building is revalued at Rs. 28,000 and the value of stock be reduced by Rs. 1,500.
(4) Reserve for doubtful debts is provided at 5% on debtors.
Prepare:
(a) Profit and Loss Adjustment account.
(b) Capital Accounts of partners.
(c) Balance Sheet of the new firm.
Answer in one sentence only.
What is revaluation account?
State 'True' or 'False'.
The credit balance of revaluation account means loss on revaluation account.
Revaluation A/c is a _________.
How are accumulated profits and losses distributed among the partners at the time of admission of a new partner?
What would be the journal entry of when excess capital was withdrawn by the partner?
Indu, Vijay, and Pawan were partners in a firm sharing profits in the ratio of 4 : 3 : 3. They admitted Subhash into partnership with effect from 1st April, 2022. New profit sharing ratio among Indu, Vijay, Pawan, and Subhash will be 3 : 3 : 2 : 2. An extract of their Balance Sheet as at 31st March, 2022, is given below:
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Investment Fluctuation Reserve |
80,000 | Investment (Market Value ₹ 80,000) |
90,000 |
Which of the following is the correct accounting treatment of ‘investment fluctuation reserve’ at the time of Subhash’s admission?
A, B and C who were sharing profits and losses in the ratio of 4:3:2 decided to share the future profits and losses in the ratio to 2:3:4 with effect from 1st April 2023. An extract of their Balance Sheet as at 31st March 2023 is:
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Workmen Compensation Reserve | 65,000 |
At the time of reconstitution, a certain amount of Claim on workmen compensation was determined for which B’s share of loss amounted to ₹ 5,000. The Claim for workmen compensation would be:
X and Y are partners in a firm with capital of ₹ 18,000 and ₹ 20,000. Z brings ₹ 10,000 for his share of goodwill, and he is required to bring proportionate capital for `1/3`rd share in profits. The capital contribution of Z will be ______.
Hansa and Kavya share profits and losses in the ratio of 3: 2 respectively. Their Balance Sheet as on 31st March, 2023 was as under:
| Balance Sheet as on 31st March, 2023 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Bills Payable | 90,000 | Cash at Bank | 1,500 |
| Reserve fund | 60,000 | Sundry Debtors | 1,33,500 |
| Capital A/c: | Stock | 51,000 | |
| Hansa | 2,16,000 | Furniture | 72,000 |
| Kavya | 1,44,000 | Plant | 1,80,000 |
| Building | 72,000 | ||
| 5,10,000 | 5,10,000 | ||
They admit Munir into partnership on 1-4-2023. The terms being that:
(1) He shall have to bring in ₹ 1,20,000 as his Capital for 1/4th share in future profits.
(2) Value of Goodwill of the firm is to be fixed at the average profits for the last three years.
The Profits were:
| 2019-20 | ₹ 96,000 |
| 2020-21 | ₹ 1,62,000 |
| 2021-22 | ₹ 1,47,000 |
(3) Reserve for Doubtful debts is to be created at ₹ 3,000.
(4) Closing stock is valued at ₹ 45,000.
(5) Plant and Building is to be depreciated by 5%.
Prepare Profit and Loss Adjustment Alc, Capital Accounts of Partners and Balance Sheet of the new firm.
