On the admission of a new partner increase in the value of assets is debited to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Assets account
On admission the assets are revalued. An increase in the value of an asset is a gain: the asset account is debited (its book value goes up) and the Revaluation Account is credited. The gain is later transferred to the old partners in their old ratio.
Option (1) Profit and Loss Adjustment account — Incorrect. This is another name for the Revaluation Account; a gain on an asset is credited to it, not debited.
Option (3) Revaluation Account — Incorrect. The Revaluation Account is credited with the increase because it is a gain; it is debited only with a fall in the value of an asset or a rise in a liability.
Option (4) Old partner’s capital account — Incorrect. The old partners’ capital accounts are credited with the net gain on revaluation; a gain would never be debited to them.
NCERT (2026-27 edition):
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