Accountancy Part AAdmission of a Partner

At the time of Revaluation of Assets and Liabilities during admission…

At the time of Revaluation of Assets and Liabilities during admission of partner.............

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Unrecorded Assets should be credited and unrecorded liabilities should be debited to Revaluation A/c

Bringing an unrecorded asset into the books is a gain, so it is credited to the Revaluation Account; an unrecorded liability is a loss, so it is debited.

Option (1) Profit or Gain transferred to sacrificing partners — Incorrect. The gain goes to all old partners in their old ratio, not in the sacrificing ratio.

Option (2) Reduction of liability should be credited to partners capital account — Incorrect. It is credited to the Revaluation Account first; only the net balance reaches the capital accounts.

Option (3) Unrecorded assets and liabilities should be written off immediately — Incorrect. They are brought into the books, not written off.

NCERT (2026-27 edition):
Revaluation of Assets and Reassessment of Liabilities – “… In other words, the revaluation account is credited with increase in the value of each asset and decrease in its liabilities because it is a gain and is debited with decrease in the value of assets and increase in its liabilities is debited to revaluation account because it is a loss. Similarly unrecorded assets are credited and unrecorded liabilities are debited to the revaluation account. If the revaluation account finally shows a credit balance then it indicates net gain and if there is a debit balance then it indicates net loss. Which will be transferred to the capital accounts of the old partners in old ratio.”