Question : If partners decided not to change book value of assets and liabilities on admission of new partners, then account prepared to adjust profit and loss arising on account of change in value of assets and liabilities is
Option 1: Profit and loss adjustment account
Option 2: Revaluation account
Option 3: Memorandum revaluation account
Option 4: None of the above
Correct Answer: Memorandum revaluation account
Solution : Answer = Memorandum revaluation account
When partners decide not to change the book value of assets and liabilities upon the admission of new partners, any profit or loss arising from the change in the value of these items is adjusted through a Memorandum Revaluation Account. This account records the adjustments without affecting the actual book values of assets and liabilities.
Hence, the correct option is 3.
