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On admission of a partner unrecorded investments worth Rs.5,000 and unrecorded liability towards suppliers for Rs.1,500 will be recorded in
- a)Revaluation A/c
- b)Capital A/c
- c)Realisation A/c
- d)None of the three
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
On admission of a partner unrecorded investments worth Rs.5,000 and un...
Explanation:
When a new partner is admitted in a firm, the value of the assets and liabilities of the firm needs to be adjusted. This process is known as revaluation of assets and liabilities. The unrecorded investments of Rs.5,000 and unrecorded liability towards suppliers of Rs.1,500 need to be recorded in the books of the firm.
The correct account in which these adjustments will be made is the Revaluation Account. The Revaluation Account is a nominal account that is used to record the adjustments made to the value of the assets and liabilities of the firm.
The following entry will be passed in the books of the firm to record the adjustments:
Revaluation A/c Dr. 6,500
To Investments A/c 5,000
To Suppliers A/c 1,500
The Revaluation Account will be debited with the total amount of adjustments, i.e., Rs.6,500. The Investments Account will be credited with Rs.5,000 and the Suppliers Account will be credited with Rs.1,500.
The final balance in the Revaluation Account will represent the total amount of adjustments made to the value of the assets and liabilities of the firm. This balance will be transferred to the Capital Accounts of the partners in their profit-sharing ratio.
Conclusion:
Hence, option 'A' is the correct answer as unrecorded investments and liabilities towards suppliers will be recorded in the Revaluation Account on admission of a new partner.
When a new partner is admitted in a firm, the value of the assets and liabilities of the firm needs to be adjusted. This process is known as revaluation of assets and liabilities. The unrecorded investments of Rs.5,000 and unrecorded liability towards suppliers of Rs.1,500 need to be recorded in the books of the firm.
The correct account in which these adjustments will be made is the Revaluation Account. The Revaluation Account is a nominal account that is used to record the adjustments made to the value of the assets and liabilities of the firm.
The following entry will be passed in the books of the firm to record the adjustments:
Revaluation A/c Dr. 6,500
To Investments A/c 5,000
To Suppliers A/c 1,500
The Revaluation Account will be debited with the total amount of adjustments, i.e., Rs.6,500. The Investments Account will be credited with Rs.5,000 and the Suppliers Account will be credited with Rs.1,500.
The final balance in the Revaluation Account will represent the total amount of adjustments made to the value of the assets and liabilities of the firm. This balance will be transferred to the Capital Accounts of the partners in their profit-sharing ratio.
Conclusion:
Hence, option 'A' is the correct answer as unrecorded investments and liabilities towards suppliers will be recorded in the Revaluation Account on admission of a new partner.
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On admission of a partner unrecorded investments worth Rs.5,000 and unrecorded liability towards suppliers for Rs.1,500 will be recorded ina)Revaluation A/cb)Capital A/cc)Realisation A/cd)None of the threeCorrect answer is option 'A'. Can you explain this answer?
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