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The account which is prepared to adjust the increase or decrease in the value of assets at the time of admission of a partner is called: -

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Question

The account which is prepared to adjust the increase or decrease in the value of assets at the time of admission of a partner is called:

Options

  • Realisation Account

  • Revaluation Account

  • Profit and Loss Account

  • None of these

MCQ

Solution

Revaluation Account

Explanation:

The Revaluation Account is set up to compensate for the growth or reduction in the values of assets and liabilities at the time of a partner's admission.

The Realisation Account is prepared at the moment of the firm's dissolution.

Regardless of the firm's reconstitution, the profit and loss account is prepared when the final accounts are prepared.

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Admission of a Partner - Revaluation of Assets and Liabilities
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