Which of the given transactions are to be transferred to Revaluation Account

A. Stock was overvalued by 20%
B. General reserve appearing in Books ₹2,00,000
C. Goodwill valued at ₹1,50,000
D. Workers claim of 20,000, when there was no workmen Compensation fund
E. Goodwill appearing in the books ₹1,00,000

Choose the correct answer from the options given below.

A and D only

The correct answer is option 3- A and D only.

A. Stock was overvalued by 20%- This is recorded in revaluation account as it is loss for the firm. Overvaluation is corrected by debiting the revaluation account.

B. General reserve appearing in Books ₹2,00,000- This is not recorded in revaluation account.It is distributed between partners in their profit sharing ratio.

C. Goodwill valued at ₹1,50,000 - This is not recorded in revaluation account. Valued goodwill is treated between partners according to their terms and conditions.

D. Workers claim of 20,000, when there was no workmen Compensation fund- This is recorded in revaluation account as there is no fund so it is loss for the firm and recorded on the debit side of revaluation account.

E. Goodwill appearing in the books ₹1,00,000- This is not recorded in revaluation account. Old goodwill is written off among old partners.

Revaluation account serves as a record of changes in the value of assets and liabilities. When there is an increase in the value of each asset or a decrease in liabilities, it is considered a gain and is credited to the revaluation account. Conversely, when there is a decrease in the value of assets or an increase in liabilities, it is considered a loss and is debited to the revaluation account. Additionally, any unrecorded assets are credited to the revaluation account, and unrecorded liabilities are debited to the revaluation account to ensure proper accounting. After all the adjustments are made, the revaluation account's final balance can either be a credit or a debit. If it shows a credit balance, it indicates a net gain resulting from the revaluation process. On the other hand, if it shows a debit balance, it indicates a net loss from the revaluation. Ultimately, the net gain or net loss reflected in the revaluation account will be transferred to the capital accounts of the old partners based on the previously agreed-upon ratio among the partners. This ensures that the partners' capital accounts are adjusted to account for the changes in the partnership's assets and liabilities due to the revaluation.