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The firm of A, B and C received a commission of ₹ 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received ₹ 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?
- a)Debit by ₹10,000
- b)Credit by ₹10,000
- c)Debit by ₹40,000
- d)No effect
Correct answer is option 'A'. Can you explain this answer?
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The firm of A, B and C received a commission of 50,000 during 2020-21...
Transaction and its Impact on Revaluation Account
Transaction: The partners of A, B and C firm decided to change the profit sharing ratio with effect from 1st April, 2021, and treated 10,000 out of the total commission of 50,000 received during 2020-21 as advance commission.
Impact on Revaluation Account:
- Revaluation Account is a nominal account that is used to record the adjustments made to the value of assets and liabilities of the firm due to changes in the capital structure or profit-sharing ratio of the partners.
- In this case, the change in the profit sharing ratio is likely to affect the value of the firm's assets and liabilities.
- The treatment of 10,000 out of the total commission of 50,000 as advance commission will result in a reduction of the commission income for the current year.
- As a result, the revaluation account will be debited by 10,000 to record the reduction in commission income due to the treatment of advance commission.
Answer: Therefore, the correct answer is option 'A', i.e., Debit by 10,000.
Transaction: The partners of A, B and C firm decided to change the profit sharing ratio with effect from 1st April, 2021, and treated 10,000 out of the total commission of 50,000 received during 2020-21 as advance commission.
Impact on Revaluation Account:
- Revaluation Account is a nominal account that is used to record the adjustments made to the value of assets and liabilities of the firm due to changes in the capital structure or profit-sharing ratio of the partners.
- In this case, the change in the profit sharing ratio is likely to affect the value of the firm's assets and liabilities.
- The treatment of 10,000 out of the total commission of 50,000 as advance commission will result in a reduction of the commission income for the current year.
- As a result, the revaluation account will be debited by 10,000 to record the reduction in commission income due to the treatment of advance commission.
Answer: Therefore, the correct answer is option 'A', i.e., Debit by 10,000.
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The firm of A, B and C received a commission of 50,000 during 2020-21...
Advance commission will be credited because it is a liability for the firm and revaluation account will be debited by ₹ 10,000.
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The firm of A, B and C received a commission of 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?a)Debit by 10,000b)Credit by 10,000c)Debit by 40,000d)No effectCorrect answer is option 'A'. Can you explain this answer?
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The firm of A, B and C received a commission of 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?a)Debit by 10,000b)Credit by 10,000c)Debit by 40,000d)No effectCorrect answer is option 'A'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about The firm of A, B and C received a commission of 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?a)Debit by 10,000b)Credit by 10,000c)Debit by 40,000d)No effectCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The firm of A, B and C received a commission of 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?a)Debit by 10,000b)Credit by 10,000c)Debit by 40,000d)No effectCorrect answer is option 'A'. Can you explain this answer?.
The firm of A, B and C received a commission of 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?a)Debit by 10,000b)Credit by 10,000c)Debit by 40,000d)No effectCorrect answer is option 'A'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about The firm of A, B and C received a commission of 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?a)Debit by 10,000b)Credit by 10,000c)Debit by 40,000d)No effectCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The firm of A, B and C received a commission of 50,000 during 2020-21 with effect from 1st April, 2021, the partners decided to change the profit sharing ratio. It was decided that out of total commission received 10,000 to be treated as advance commission. What will be the initial effect on revaluation account on account of this transaction?a)Debit by 10,000b)Credit by 10,000c)Debit by 40,000d)No effectCorrect answer is option 'A'. Can you explain this answer?.
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