Match the LIST-I with LIST-IILIST-ILIST-IIA.Increase in the value of…

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	Increase in the value of each asset will be shown	I.	it indicates net gain, which will be transferred to the capital accounts of the old partners in old ratio.
B.	If the closing balance of revaluation account shows a credit balance then	II.	it indicates net loss which will be transferred to the capital accounts of the old partners in old ratio.
C.	Decrease in the value of each asset will be shown	III.	on credit side of Revaluation account
D.	If the closing balance of revaluation account shows a debit balance then	IV.	on debit side of Revaluation account

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → A-III, B-I, C-IV, D-II

The Revaluation Account takes gains on its credit side and losses on its debit side. Its balance is the net gain or net loss of the old partners, shared in the old ratio.

(A) Increase in the value of each asset will be shown — this matches (III) on credit side of Revaluation account. An increase in an asset is a gain, and gains are credited.

(B) If the closing balance of revaluation account shows a credit balance then — this matches (I) it indicates net gain, which will be transferred to the capital accounts of the old partners in old ratio. The credits are more than the debits.

(C) Decrease in the value of each asset will be shown — this matches (IV) on debit side of Revaluation account. A decrease in an asset is a loss, and losses are debited.

(D) If the closing balance of revaluation account shows a debit balance then — this matches (II) it indicates net loss which will be transferred to the capital accounts of the old partners in old ratio. The debits are more than the credits.

NCERT (2026-27 edition):
Revaluation of Assets and Reassessment of Liabilities – “… For this purpose the firm has to prepare the Revaluation Account. The gain or loss on revaluation of each asset and liability is transferred to this account and finally its balance is transferred to the capital accounts of the old partners in their old profit sharing ratio. 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.”