A memorandum revaluation account is used when partners do not want to change the book values of assets and liabilities. In the second part of this account, any reversal profit or loss is transferred among which partners?
Correct answer: C. All partners in their new ratio
- A. Old partners in their old ratio
- B. Old partners in their new ratio
- C. All partners in their new ratio
- D. The incoming partner alone
Explanation
The first part records the original revaluation result for the old partners, while the second part reverses it. The reversal is shared by all partners, including the incoming partner, in the new profit-sharing ratio.
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About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
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