Multiple choice

P, Q and R were sharing profits and losses equally. P decided to retire. On his retirement, it was agreed to reduce the value of debtors by Rs. 30,000, increase the value of buildings by Rs. 1,00,000 and investments by Rs. 20,000. Find out the profit on revaluation to each of the partners.

  1. Rs. 30,000

  2. Rs. 50,000

  3. Rs. 15,000

  4. Rs. 20,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Net revaluation profit = 1,00,000 (building) + 20,000 (investment) - 30,000 (debtors) = 90,000. Since they share equally, each partner gets 90,000 / 3 = 30,000.

AI explanation

The net profit on revaluation is calculated by taking the total increase in asset values and subtracting the total decrease in asset values. The increases are Rs. 1,00,000 for buildings and Rs. 20,000 for investments, while the decrease is Rs. 30,000 for debtors, resulting in a net revaluation profit of 1,00,000 plus 20,000 minus 30,000, which equals Rs. 90,000. Because the partners shared profits and losses equally, this Rs. 90,000 profit is divided by 3, giving Rs. 30,000 for each partner. The correct answer is Rs. 30,000.

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