Question

X, Y and Z are partners sharing profits and losses in the ratio of 2: 3: 1. They decided to share future profits in the ratio of 3:2: 1 with effect from 1^st April, 2022. At the time of change of profit sharing ratio, unrecorded furniture will be recorded in the books of Accounts by ______.

Options

• Debiting it to Partners' Capital Account

• Debiting it to Revaluation Account

• Crediting it to Revaluation Account

• Crediting it to Partners' Capital Account

Answer 1

X, Y and Z are partners sharing profits and losses in the ratio of 2: 3: 1. They decided to share future profits in the ratio of 3:2: 1 with effect from 1^st April, 2022. At the time of change of profit sharing ratio, unrecorded furniture will be recorded in the books of Accounts by Crediting it to Revaluation Account.

Explanation:

At the time of change in profit sharing ratio, unrecorded asset will be credited. to Revaluation Account.