Question : Given below are two statements, one labelled as Assertion (A) and the other labeled as Reason (R):
Assertion (A): Revaluation A/c is prepared at the time of Admission of a partner.
Reason (R): The profit or loss on the revaluation of assets and liabilities, on reconstitution of firm, is related to old partners in their old ratio.
In the context of the above two statements, which of the following is correct?
Codes:
Option 1: Both (A) and (R) are correct and (R) is the correct Reason of (A).
Option 2: Both (A) and (R) are correct but (R) is not the correct Reason of (A).
Option 3: Only (R) is correct.
Option 4: Both (A) and (R) are wrong.
Correct Answer: Both (A) and (R) are correct and (R) is the correct Reason of (A).
Solution : Answer = Both (A) and (R) are correct and (R) is the correct Reason for (A).
Both the assertion and reason are correct. Revaluation accounts are often prepared during the admission of a new partner to adjust the value of assets and liabilities. The profit or loss resulting from the revaluation is typically allocated to the existing partners based on their old profit-sharing ratio, supporting the reason provided. Hence, the correct option is 1.
Question : Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R)
Assertion (A): On reconstitution of a firm, 'Interest on Drawings' sshown in P & L Appropriation A/c.
Reason
Question : Assertion A :- Analysis of financial statements is based on the information given in the financial statements. Hence, this analysis suffers from all such limitations from which the financial statements suffer.
Reason R:- The subjectivity is inherent in personal
Question : Assertion A :- Price level changes and the purchasing power of money are inversely related. A change in the price level makes analysis of financial statements of different accounting years invalid.
Reason R :- Accounting records ignore changes in the value of
Question : Assertion A:- Unrecorded income when recorded is shown in the credit of revaluation account at the time of change in profit sharing ratio.
Reason R:- It is shown in the credit of the revaluation account because it is a
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