On the admission of a new partner, an increase in the value of assets is debited to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Assets account
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At the time of admission of a new partner, assets and liabilities may be revalued to reflect their current market values.
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If the value of an asset increases, the concerned Asset Account is debited (to increase its balance) and the Revaluation Account is credited.
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Later, the balance of the Revaluation A/c (profit or loss) is transferred to the old partners’ capital accounts in their old profit-sharing ratio.