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

When a new partner is admitted, the firm's assets and liabilities are revalued to reflect their current market values. This ensures the new partner doesn't benefit from increases that occurred before their admission.

When an asset's value increases, the accounting treatment is:

Asset A/c ... Dr

To Revaluation A/c

The increase in value is debited to the Assets account itself to record the enhanced value of that asset in the books.

Understanding the entry:

The asset account is debited because an increase in asset value means the asset is now worth more, and assets have a debit nature. Any increase in an asset must be recorded on the debit side of that asset account.

The corresponding credit goes to the Revaluation Account, which accumulates all profits and losses from revaluation. This profit (from asset appreciation) is then distributed among the old partners in their old profit-sharing ratio.

The Revaluation Account is merely a temporary account used to calculate net gain or loss from revaluation - it is not the account that receives the debit for asset increase.

Correct Answer: Option 2 - Assets account