REVALUATION ACCOUNT CLASS 12 ACCOUNT

ACCOUNTS BY SONIA SETIA

REVALUATION ACCOUNT CLASS 12 ACCOUNT. IN THIS VIDEO YOU WILL GET AN IDEA OF PREPARING THE REVALUATION ACCOUNT OF PARTNERSHIP ACCOUNTING OF CLASS 12TH ACCOUNTANCY. DO SHARE WITH YOUR LOVED ONES. THANKS AND REGARDS.

Transcript

00:00Curious about why revaluating assets and liabilities is crucial during profit-sharing changes?

00:06Here's the deal.

00:07The actual and realizable value of assets and liabilities can differ from what's shown in the balance sheet.

00:13Some assets might have appreciated while others might have decreased in value.

00:18When partners change their profit-sharing ratio, these value changes belong to the period before the new ratio.

00:24That's why it's fair to share these changes in the old ratio.

00:28How do we do it?

00:29With the revaluation account, also known as the profit and loss adjustment account.

00:34The debit side records decreases in asset values, increases in liabilities, and any unrecorded liabilities.

00:41The credit side, it's for increases in asset values, decreases in liabilities, and unrecorded assets.

00:47If the credit side outweighs the debit, the firm gains, and this gain is transferred to partners' capital accounts.

00:54But if the debit side is bigger, there's a loss, and this loss is also adjusted in the partners' capital accounts.

01:01Hope this clears things up.

01:02Stay tuned for more accounting insights from Accounting by Sonia Setia.

01:06Thanks for watching.

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