Question

State Whether the following Statement is True or False:

The balance of Revaluation Account is transferred to all partner's capital accounts including new partner.

Answer 1

The statement is false.

Explanation:

• The profit or loss shown in the Revaluation Account belongs entirely to the period before the new partner joins the firm.
• Therefore, the balance is transferred only to the Old Partners' Capital Accounts in their Old Profit Sharing Ratio.
• The new partner has no claim or liability over these past value adjustments