Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

At the time of retirement, if bad debts which were written off previously are now recovered, then where it is shown at the time of revaluation of assets?

Options:

Credit side of revaluation account

Debit side of revaluation account

Credit side of partner's capital account

Debit side of partner's capital account

Correct Answer:

Credit side of revaluation account

Explanation:

The revaluation account is credited with the increase in the value of each asset and the decrease in its liabilities. Bad debts recovered are a profit for the firm so it is credited to the revaluation account.