On the admission of a new partner, an increase in the value of assets is debited to:

Assets account

The correct answer is Option (2) → Assets account

• At the time of admission of a new partner, assets and liabilities may be revalued to reflect their current market values.

• If the value of an asset increases, the concerned Asset Account is debited (to increase its balance) and the Revaluation Account is credited.

• 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.