Question

Roopa and Daya were partners in a firm. They admitted Navin as a new partner for a `1/3`rd share in the profits. On Navin’s admission, it was found that there was a claim against the firm for damages for which a liability for damages should be created. Which of the following accounts will be debited for creating the liability:

Options

• Profit and Loss Appropriation Account

• Profit and Loss Account

• Revaluation Account

• Profit and Loss Adjustment Account

Answer 1

Revaluation Account

Explanation:

Liability of any size is moved to the Revaluation account.