Accountancy Part AAdmission of a Partner

Unrecorded liability arising on the admission of partner will be :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Debited to Revaluation Account

An unrecorded liability brought into the books on admission is an increase in liabilities, i.e. a loss on revaluation, so it is debited to the Revaluation Account (Revaluation A/c Dr, To Liability A/c). The net result of revaluation goes to the old partners in the old ratio.

Option (1) Debited to Goodwill Account — Incorrect. Goodwill is not affected by revaluation of liabilities.

Option (2) Credited to Revaluation Account — Incorrect. The credit side records gains, such as unrecorded assets.

Option (4) Credited to partners Capital Account — Incorrect. Only the net balance of the Revaluation Account reaches the capital accounts, and a loss is debited to them.

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.”