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Revaluation account is a nominal account. It is prepared in case when partners want to alter or revise the value of assets and liabilities. It is opened with a purpose to ascertain profit or loss occurring due to increase or decrease in assets and liabilities. It is prepared by the Partnership firms.
Table of Contents
REVALUATION ACCOUNT CLASS 12 QUESTIONS
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| PARTICULARS | ₹ | PARTICULARS | ₹ |
| To Assets A/c (Decrease in Assets) To Liabilities A/c (Increase in Liabilities) To Provisions A/c (Creation of Provisions) To Profit (B.F.) (Partner’s Capital) | By Assets A/c (Increase in Assets) By Unrecorded Assets By Liabilities A/c (Decrease in Liabilities) By Provisions A/c (Decrease in Provision) BY Loss (B.F.) (Partner’s Capital A/c) |
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| ITEMS | ENTRY | REASON |
| Increase in Assets | Asset A/c Dr. To Revaluation A/c | Increase in the value of the asset is a gain. |
| Decrease in Assets | Revaluation A/c Dr. To Assets A/c | Decrease in the value of asset is a loss. |
| Unrecorded Assets | Asset A/c Dr. To Revaluation A/c | Addition to the assets is a gain. |
| ITEMS | ENTRY | REASON |
| Decrease in Liabilities | Revaluation A/c Dr. To Revaluation A/c | Decrease in liabilities is a gain. |
| Increase in Liabilities | Revaluation A/c Dr. To Liabilities A/c | Increase in liability is a loss. |
| Creating Provisions | Revaluation A/c Dr. To Provision A/c | It reduces profit. |
| Unrecorded liabilities brought into books. | Revaluation A/c Dr. To Liabilities A/c | Addition of liabilities is a loss. |
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REVISED VALUES ARE NOT TO BE RECORDED
Calculation of Net effect on Revaluation:
Increase in value of the assets
Add: Decrease in amount of liabilities.
Less: Decrease in the value of assets.
Less: Increase in the amount of liabilities.
Net effect of revaluation
| For Gain on Revaluation | For Loss on Revaluation |
| Gaining Partner’s capital A/c Dr. To Sacrificing Partner’s Capital A/c | Sacrificing Partner’s A/c Dr. To Gaining Partner’s Capital A/c |
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TRUE/FALSE
- After revaluation, assets and liabilities may or may not be shown in the Balance Sheet at the revised values.
answer:- true - Journal entry for revaluation expenses payable to a partner at the time of revaluation of assets and reassessment of liabilities is:
answer:-revaluation expenses of to cash a/c - Journal entry for revaluation expenses incurred and paid by the firm is:
answer:- revaluation a/c expenses Dr.to revaluation expenses - Revaluation of assets on the reconstitution of partnership is necessary because their present value may be different from their………………….
ANSWER:- Original /book values
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5. Assets are revalued and liabilities are reassessed at the time of change in profit-sharing ratio so that (a)Assets and liabilities are shown at their present values. (b)Gaining partner is not put to an advantage and sacrificing partner is not put to disadvantage and vice-versa (c)Both (a) and (b) (d)Assets and Liabilities are shown at the market values.
answer:- c
6. Excess of the credit side over the debit side of Revaluation account is: (a) Profit (b) Loss (c) Gain (d) Expense
answer:- a
7. Balance sheet prepared after new partnership agreement, assets and liabilities are recorded at:
(a) Original Value
(b) Revalued Figure
(c) At Realizable Value
(d) Either of (a) or (b)
answer:- d
8. Assets and Liabilities are shown at their revalued values in :
(a) New Balance Sheet
(b) Revaluation A/c
(c) All Partner’s Capital A/c’s
(d) Realisation A/c
answer:- a
9. The balance of Revaluation Account or Profit & Loss Adjustment Account is transferred to Old Partners’ Capital Accounts in their :
(a) Old profit-sharing ratio
(b) New profit-sharing ratio
(c) Equal ratio
(d) Capital ratio
answer:- a
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10. On reconstitution of a partnership firm, recording of an unrecorded liability will result in:
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither gain nor loss to the existing partners
(d) None of these
answer:- b
11. Increase In the value of assets on reconstitution of the partnership firm results into :
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither gain nor loss to the existing partners
(d) None of these
answer:- a
12. Revaluation Account or Profit & Loss Adjustment Account is a:
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) None of these
answer:- c
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ALSO VISIT: NON PROFIT ORGANISATIONS ACCOUNTS CLASS 12 ; MCQs ,
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