Multiple choice

At the time of admission of a new partner, increase in the assets are credited to a

  1. revaluation account

  2. partners capital account

  3. profit and loss account

  4. Demat account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a new partner is admitted, asset increases must first be recorded in a Revaluation Account. This account adjusts asset values to current market prices before calculating the new partner's share. Only after revaluation are changes reflected in partners' capital accounts.

Keep practicing — related questions