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What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back?
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What will be process of this adjustment on admission of a partner in r...
Adjustment on Admission of a Partner in Revaluation
Revaluation is a process that is followed when a new partner is admitted to the firm. The purpose of this process is to adjust the values of assets and liabilities of the firm to their current market value. In the case of admission of a partner, the firm's balance sheet is revalued, and the partners' capital accounts are adjusted accordingly. Let us see the process of this adjustment in detail.
Adjustment in Partner's Capital
The admission of a new partner affects the capital accounts of all the existing partners. The following steps are followed to adjust the partner's capital:
- The firm's assets and liabilities are revalued to their current market value.
- The revaluation surplus or deficit is distributed among the existing partners in the profit and loss sharing ratio.
- The new partner's capital is credited with the amount of capital introduced by him/her.
- The new partner's share in the revaluation surplus or deficit is calculated and credited or debited to his/her capital account accordingly.
Adjustment in Balance Sheet
The revaluation of assets and liabilities also affects the firm's balance sheet. The following steps are followed to adjust the balance sheet:
- The assets and liabilities are adjusted to their current market value.
- The revaluation surplus or deficit is added or deducted from the respective asset or liability account.
- If an item is not likely to be claimed, it should be written back. In the given case, the item of 650 included in sundry creditors is not likely to be claimed, hence it should be written back by debiting the sundry creditors account and crediting the profit and loss account.
Conclusion
In conclusion, the admission of a new partner requires the revaluation of assets and liabilities of the firm, and the adjustment of partners' capital accounts and the balance sheet. It is essential to follow the proper process of revaluation to ensure that the capital accounts and balance sheet reflect the correct financial position of the firm.
Revaluation is a process that is followed when a new partner is admitted to the firm. The purpose of this process is to adjust the values of assets and liabilities of the firm to their current market value. In the case of admission of a partner, the firm's balance sheet is revalued, and the partners' capital accounts are adjusted accordingly. Let us see the process of this adjustment in detail.
Adjustment in Partner's Capital
The admission of a new partner affects the capital accounts of all the existing partners. The following steps are followed to adjust the partner's capital:
- The firm's assets and liabilities are revalued to their current market value.
- The revaluation surplus or deficit is distributed among the existing partners in the profit and loss sharing ratio.
- The new partner's capital is credited with the amount of capital introduced by him/her.
- The new partner's share in the revaluation surplus or deficit is calculated and credited or debited to his/her capital account accordingly.
Adjustment in Balance Sheet
The revaluation of assets and liabilities also affects the firm's balance sheet. The following steps are followed to adjust the balance sheet:
- The assets and liabilities are adjusted to their current market value.
- The revaluation surplus or deficit is added or deducted from the respective asset or liability account.
- If an item is not likely to be claimed, it should be written back. In the given case, the item of 650 included in sundry creditors is not likely to be claimed, hence it should be written back by debiting the sundry creditors account and crediting the profit and loss account.
Conclusion
In conclusion, the admission of a new partner requires the revaluation of assets and liabilities of the firm, and the adjustment of partners' capital accounts and the balance sheet. It is essential to follow the proper process of revaluation to ensure that the capital accounts and balance sheet reflect the correct financial position of the firm.
Community Answer
What will be process of this adjustment on admission of a partner in r...
Liability is decreasing so it should be written in cr. side of revaluation account. Creditor is our liability and according to the statement now we not need to pay rupees 650 to him.So reduction of liability is written in cr. side of revaluation account.
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What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back?
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What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back?.
What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What will be process of this adjustment on admission of a partner in revaluation,partners capital ,or balance sheet - an item of 650 included in sundry creditors is not likely to be claim hence it should be written back?.
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