Question

Journal entry to be passed for unrecorded assets for preparing Revaluation A/C at the time of Retirement of a partner will be______

• A. Assets A/C Dr. To all Partners capital A/C
• B. Assets A/C Dr. To Revaluation A/c
• C. Revaluation A/C Dr. To assets A/C
• D. Revaluation A/C Dr. To old partner's capital A/C

Answer 1

The Correct Option is B

When a partner retires, it's common practice to re-evaluate the assets of the partnership to bring them to their current market value. Any unrecorded assets or discrepancies in asset values identified during this process need to be adjusted in the books. To account for these changes appropriately, the following journal entry is made:

Journal Entry:

Assets A/C	Dr.
	To Revaluation A/C

This entry is necessary because it adjusts for any increase in the value of assets that were not previously recorded. Here's a breakdown of the journal entry process:

• Debit Assets A/C: This reflects the increase in the value of the assets or acknowledges an asset that was previously unrecorded.
• Credit Revaluation A/C: This recognizes the gain arising from this adjustment and ensures that the net effect is captured in the revaluation account, which will eventually be transferred to the capital accounts of all partners as per their profit-sharing ratio.

By doing this, the partnership's financial statements accurately reflect the current market value of its assets as of the retirement date of the partner.