Pearson A-Level Accounting Revaluations (Partnerships)

What is the purpose of revaluing assets and liabilities in a partnership?

• To increase profits for the year

• To reflect their fair value before a change in partnership

• To reduce the tax liability of the partnership

• To allocate profits equally among partners

Which account is created to record the gain or loss from revaluation?

• Capital Account

• Revaluation Account

• Current Account

• Profit and Loss Account

When revaluing assets, an increase in the value of an asset will be:

• Debited to the Revaluation Account

• Credited to the Revaluation Account

• Debited to the Capital Account

• Credited to the Current Account

Revaluation of assets and liabilities only occurs when a new partner joins the business.

• True

• False

A decrease in the value of a liability will increase the capital of the partners.

• True

• False

The balance of the revaluation account is transferred to the ____________ accounts of the partners.

If an asset is revalued upwards, it is a __________ (debit or credit) in the Revaluation Account.