On the admission of a new partner, an increase in the value of assets is debited to: Option 1: Profit and Loss Adjustment Account Option 2: Assets Account Option 3: Old partner's Capital Account Option 4: New Partner Capital Account

Answer: Assets Account. Solution: When there's an increase in the value of assets on admission of a new partner, the revaluation is recorded through a journal entry. The accounting treatment follows the basic principle that an increase in asset value means the asset's book value needs to be enhanced. As per the accounting equation, when an asset increases, we debit the respective asset account. Journal Entry:, Particulars, Debit (₹), Credit (₹), Assets Account, XXX, To Revaluation Account/Profit and Loss Adjustment Account, XXX, (Being increase in value of asset on revaluation), The Assets Account is debited to reflect the enhanced value, while the Revaluation Account (also called Profit and Loss Adjustment Account) is credited. The profit from revaluation is later transferred to old partners' capital accounts in their old profit-sharing ratio. It's important to understand that while the Profit and Loss Adjustment Account ultimately receives the credit, the immediate debit for the increase goes to the specific asset account whose value has increased (e.g., Land Account, Building Account, Machinery Account, etc.). Correct Answer: Option 2 - Assets account

Partnership

Admission

Easy

common

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

Profit and Loss Adjustment Account

Assets Account

Old partner's Capital Account

New Partner Capital Account

✅ Correct Option: 2

When there's an increase in the value of assets on admission of a new partner, the revaluation is recorded through a journal entry.

The accounting treatment follows the basic principle that an increase in asset value means the asset's book value needs to be enhanced. As per the accounting equation, when an asset increases, we debit the respective asset account.

Journal Entry:

Particulars	Debit (₹)	Credit (₹)
Assets Account	XXX
$\quad$ To Revaluation Account/Profit and Loss Adjustment Account		XXX
(Being increase in value of asset on revaluation)

The Assets Account is debited to reflect the enhanced value, while the Revaluation Account (also called Profit and Loss Adjustment Account) is credited. The profit from revaluation is later transferred to old partners' capital accounts in their old profit-sharing ratio.

It's important to understand that while the Profit and Loss Adjustment Account ultimately receives the credit, the immediate debit for the increase goes to the specific asset account whose value has increased (e.g., Land Account, Building Account, Machinery Account, etc.).

Correct Answer: Option 2 - Assets account

2025: 14 May Shift 1

$A$ and $B$ are partners in a firm sharing profits in the ratio of $5:3$ . They admit $C$ as a new partner for $\frac{1}{7}$ th share in the profits. The new profit sharing ratio will be $4:2:1$ . The sacrificing ratio of $A$ and $B$ is

2026: 21 May Shift 2

Which of the following needs no adjustments in the books of firm at the time of admission of a new partner?

2025: 14 May Shift 1

The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. A will bring in cash as capital after adjustment amount:

2026: 12 May Shift 1

In case of admission of a partner, Match List-I with List-II.

List-I	List-II
(A) For Unrecorded Liability	(I) Revaluation A/c Dr. To Asset A/c
(B) For Over-Valuation of Asset	(II) Partners' Capital A/c Dr. To Revaluation A/c
(C) For transferring loss on revaluation	(III) Revaluation A/c Dr. To Liability A/c
(D) For Under-Valuation of Asset	(IV) Asset A/c Dr. To Revaluation A/c

Choose the correct answer from the options given below:

2025: 16 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Accumulated Profits/Losses	(I) New Ratio
(B) Share of goodwill at the time of admission of a partner	(II) Gaining Ratio
(C) Division of profits after admission of a partner	(III) Old Ratio
(D) Share of goodwill at the time of retirement/death of a partner	(IV) Sacrificing Ratio

Choose the correct answer from the options given below:

2025: 2 June Shift 2

Which is the correct statement, in respect of the Revaluation Account :-

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

Solution

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