CUET UG Accountancy Booster Test 3 Revaluation & Accumulated Adjustments -

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CUET UG Accountancy Booster Test 2 Revaluation & Accumulated Adjustments

⏱️ 30 Minutes

❓ 20 Questions

📌 Answers are locked once submitted — results and explanations appear at the end.

CUET UG Accountancy Booster Test 2 Revaluation & Accumulated Adjustments

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QUESTION 1 OF 20

Match the revaluation outcomes with their corresponding journal impact:

List 1	List 2
1. Assets undervalued in books	a. Debit Asset, Credit Revaluation
2. Liabilities overvalued in books	b. Debit Liability, Credit Revaluation
3. Unrecorded asset discovered	c. Debit specific Unrecorded Asset, Credit Revaluation
4. Assets overvalued in books	d. Debit Revaluation, Credit Asset

Answer Review

1 Match the revaluation outcomes with their corresponding journal impact:

List 1	List 2
1. Assets undervalued in books	a. Debit Asset, Credit Revaluation
2. Liabilities overvalued in books	b. Debit Liability, Credit Revaluation
3. Unrecorded asset discovered	c. Debit specific Unrecorded Asset, Credit Revaluation
4. Assets overvalued in books	d. Debit Revaluation, Credit Asset

A 1-b, 2-c, 3-d, 4-a

B 1-c, 2-d, 3-b, 4-a

C 1-d, 2-a, 3-c, 4-b

D 1-c, 2-d, 3-a, 4-b

💡 Short Explanation

Undervalued assets increase. Overvalued liabilities decrease. Unrecorded assets create gain.

✅ Correct Answer Explanation

Correct matching: Asset undervalued → Debit Asset, Credit Revaluation Liability overvalued → Debit Liability, Credit Revaluation Unrecorded Asset → Debit Asset, Credit Revaluation Asset overvalued → Debit Revaluation, Credit Asset Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Asset and liability treatments mismatched.
Option C → Incorrect revaluation impacts.
Option D → Unrecorded asset incorrectly treated.

🎯 Strategy

Used

Matching Logic

Application:

�� Match accounting effect with journal entry.

Final Logic:

�� Option B correctly pairs all adjustments.

🧠 Memory Trick

"Asset Up = Credit Revaluation"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Revaluation Adjustments – Page reference may vary by edition.

2 Assertion (A): Reassessment of liabilities is strictly required upon a partner's retirement.
Reason (R): Liabilities might have been shown at a value different from the actual obligation the firm currently needs to meet.

A Both A and R are true, and R is the correct explanation of A.

B Both A and R are true, but R is not the correct explanation of A.

C A is true, but R is false.

D A is false, but R is true.

💡 Short Explanation

Liabilities may be outdated. Actual obligation must be updated. Reason explains reassessment need.

✅ Correct Answer Explanation

Liabilities must reflect current obligations before settlement with the retiring partner. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Reason directly explains assertion.
Option C → Reason true.
Option D → Assertion also true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Connect reassessment with actual liability.

Final Logic:

�� Updated liabilities ensure fair settlement.

🧠 Memory Trick

"Retirement Requires Fair Values"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Reassessment of Liabilities – Page reference may vary by edition.

3 The net gain or loss ascertained from the Revaluation Account is ultimately used to:

A Adjust the cash balance of the firm permanently.

B Determine the new profit-sharing ratio.

C Calculate the hidden goodwill of the firm.

D Adjust the capital accounts of all partners, including the retiring one.

💡 Short Explanation

Revaluation belongs to old partners. Gain/loss transferred to capitals. Retiring partner included.

✅ Correct Answer Explanation

Revaluation profit or loss is transferred to all old partners in old ratio. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Cash not directly adjusted.
Option B → Ratio determination unrelated.
Option C → Hidden goodwill separate concept.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Identify final purpose of revaluation.

Final Logic:

�� Capital accounts reflect gains/losses.

🧠 Memory Trick

"Revaluation Ends in Capitals"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Purpose of Revaluation Account – Page reference may vary by edition.

4 Sequence the steps to finalize the Revaluation Account:
1. Determine the balance (gain or loss) of the Revaluation Account.
2. Record increases/decreases in individual assets and liabilities.
3. Transfer the gain or loss to the partners' capital accounts.

A 3, 2, 1

B 1, 2, 3

C 2, 1, 3

D 2, 3, 1

💡 Short Explanation

Revaluation entries recorded first. Profit/loss determined next. Capitals adjusted finally.

✅ Correct Answer Explanation

Correct order: Record adjustments Find balance Transfer to capital accounts Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Transfer cannot occur first.
Option B → Balance impossible before entries.
Option D → Profit must be determined first.

🎯 Strategy

Used

Sequential Accounting Logic

Application:

�� Arrange closing process correctly.

Final Logic:

�� Entries precede balancing and transfer.

🧠 Memory Trick

"Record → Balance → Transfer"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Revaluation Procedure – Page reference may vary by edition.

5 Which of the following statements correctly describe the recording of an asset increase?
1. The asset account is individually debited.
2. The Revaluation account is debited.
3. The Revaluation account is credited.

A 1 and 2 only.

B 1 and 3 only.

C 2 and 3 only.

D 1, 2, and 3.

💡 Short Explanation

Asset value increases. Asset account debited. Revaluation credited.

✅ Correct Answer Explanation

Increase in asset value creates gain, so Revaluation Account is credited. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Revaluation not debited.
Option C → Asset account also debited.
Option D → Statement 2 incorrect.

🎯 Strategy

Used

Statement Verification

Application:

�� Apply journal entry logic.

Final Logic:

�� Asset increase means gain.

🧠 Memory Trick

"Asset Up → Revaluation Credit"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Increase in Assets – Page reference may vary by edition.

6 If Building (book value Rs. 1,00,000) is revalued at Rs. 1,25,000, and Patents (book value Rs. 30,000) are revalued at Rs. 40,000, what is the total credit to the Revaluation Account for these changes?

A Rs. 35,000

B Rs. 10,000

C Rs. 25,000

D Rs. 1,65,000

💡 Short Explanation

Building increased by Rs. 25,000. Patents increased by Rs. 10,000. Total gain added.

✅ Correct Answer Explanation

Building Increase: 125000 − 100000 = 25000 Patent Increase: 40000 − 30000 = 10000 Total Credit: 25000 + 10000 = 35000 Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Only patent increase considered.
Option C → Building increase only.
Option D → Total asset values wrongly used.

🎯 Strategy

Used

Asset Increase Calculation

Application:

�� Sum of all appreciation amounts.

Final Logic:

�� Total revaluation gain = Rs. 35,000.

🧠 Memory Trick

"Add All Increases"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Asset Appreciation – Page reference may vary by edition.

7 Match the account to its debited/credited status when Machinery value is decreased by Rs. 10,000:

List 1	List 2
1. Machinery Account	a. Credited (by Rs. 10,000)
2. Revaluation Account	b. Debited (by Rs. 10,000)
3. Old Partners' Capital Accounts (if this was the only change)	c. Debited (for the loss transfer)
4. Unrecorded Asset (if discovered instead)	d. Debited (to bring into books)

A 1-c, 2-b, 3-d, 4-a

B 1-a, 2-c, 3-b, 4-d

C 1-d, 2-a, 3-c, 4-b

D 1-b, 2-d, 3-c, 4-a

💡 Short Explanation

Machinery reduced and credited. Revaluation debited for loss. Unrecorded asset debited.

✅ Correct Answer Explanation

Correct matching: Machinery → Credited Revaluation → Debited Capital Accounts → Debited Unrecorded Asset → Debited Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Machinery wrongly matched.
Option B → Revaluation mismatch.
Option C → Incorrect treatments.

🎯 Strategy

Used

Matching Logic

Application:

�� Match loss treatment correctly.

Final Logic:

�� Option D fully correct.

🧠 Memory Trick

"Asset Down = Credit Asset"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Asset Decrease – Page reference may vary by edition.

8 The general formula/entry for recording a decrease in an asset's value is:

A Assets A/c Dr. To Revaluation A/c

B Partners' Capital A/c Dr. To Assets A/c

C Revaluation A/c Dr. To Assets A/c (Individually)

D Revaluation A/c Dr. To Cash A/c

💡 Short Explanation

Asset decrease creates loss. Revaluation debited. Asset credited.

✅ Correct Answer Explanation

Decrease in asset value is recorded through Revaluation Account debit. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Reverse entry.
Option B → Capital directly unaffected initially.
Option D → Cash unrelated.

🎯 Strategy

Used

Journal Entry Recall

Application:

�� Apply asset decrease entry.

Final Logic:

�� Loss debits Revaluation.

🧠 Memory Trick

"Asset Down = Revaluation Debit"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Asset Reduction Entry – Page reference may vary by edition.

9 An increase in the amount of liabilities directly represents a:

A Capital gain for the retiring partner exclusively.

B Loss on revaluation to the firm.

C Gain on revaluation to the firm.

D Deferred revenue expenditure.

💡 Short Explanation

Higher liabilities reduce net worth. Reduction represents loss. Revaluation debited.

✅ Correct Answer Explanation

Increase in liabilities decreases firm value and causes revaluation loss. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Not exclusive gain.
Option C → Opposite effect.
Option D → Unrelated concept.

🎯 Strategy

Used

Liability Impact Analysis

Application:

�� Increased obligations reduce equity.

Final Logic:

�� Liability increase = loss.

🧠 Memory Trick

"Liability Up = Loss"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Liability Increase – Page reference may vary by edition.

10 If Creditors of Rs. 49,000 are re-assessed and Rs. 4,000 is no longer payable, what is the exact impact on the Revaluation Account?

A Credit Revaluation Account by Rs. 4,000.

B Debit Revaluation Account by Rs. 4,000.

C Credit Creditors Account by Rs. 4,000.

D Debit Partners' Capital Accounts by Rs. 4,000.

💡 Short Explanation

Liability reduced by Rs. 4,000. Reduction creates gain. Revaluation credited.

✅ Correct Answer Explanation

Decrease in creditors improves firm's position and creates gain. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Debit indicates loss.
Option C → Creditors reduced, not credited.
Option D → Capital adjustment later stage.

🎯 Strategy

Used

Liability Reduction Logic

Application:

�� Reduced obligation creates gain.

Final Logic:

�� Gain credited to Revaluation Account.

🧠 Memory Trick

"Liability Down = Gain"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Decrease in Liability – Page reference may vary by edition.

11 Assertion (A): An unrecorded asset brought into the books results in a debit to the Revaluation Account.
Reason (R): Bringing an unrecorded asset into the books represents a gain, so the Revaluation Account should be credited.

A Both A and R are true, and R is the correct explanation of A.

B Both A and R are true, but R is not the correct explanation of A.

C A is true, but R is false.

D A is false, but R is true.

💡 Short Explanation

Unrecorded asset increases firm value. Asset account debited. Revaluation account credited.

✅ Correct Answer Explanation

Entry for unrecorded asset: Asset A/c Dr. To Revaluation A/c Thus, Assertion is false and Reason is true. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Assertion incorrect.
Option B → Assertion false.
Option C → Reason true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Apply correct journal entry logic.

Final Logic:

�� Unrecorded asset creates gain.

🧠 Memory Trick

"Unrecorded Asset = Revaluation Credit"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Unrecorded Assets – Page reference may vary by edition.

12 Regarding unrecorded liabilities discovered at retirement, which statements are true?
1. They decrease the net gain on revaluation.
2. They are credited to the specific Liability Account.
3. They are credited to the Revaluation Account.

A 1 and 3 only.

B 2 and 3 only.

C 1 and 2 only.

D 1, 2, and 3.

💡 Short Explanation

Unrecorded liabilities create loss. Liability account credited. Revaluation debited.

✅ Correct Answer Explanation

Entry: Revaluation A/c Dr. To Liability A/c Thus, statements 1 and 2 are true. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Statement 3 false.
Option B → Revaluation not credited.
Option D → Statement 3 incorrect.

🎯 Strategy

Used

Statement Verification

Application:

�� Analyze liability treatment.

Final Logic:

�� Liability increases create losses.

🧠 Memory Trick

"Unrecorded Liability = Revaluation Debit"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Unrecorded Liabilities – Page reference may vary by edition.

13 Match the distribution rules for Revaluation and Accumulated items:

List 1	List 2
1. Profit on Revaluation	a. Dr. Revaluation A/c, Cr. All Partners' Capital A/c
2. Loss on Revaluation	b. Dr. All Partners' Capital A/c, Cr. Revaluation A/c
3. Accumulated Reserves	c. Dr. Reserves A/c, Cr. All Partners' Capital A/c
4. Accumulated Losses	d. Dr. All Partners' Capital A/c, Cr. P&L A/c

A 1-a, 2-b, 3-c, 4-d

B 1-a, 2-c, 3-d, 4-b

C 1-b, 2-a, 3-d, 4-c

D 1-c, 2-d, 3-a, 4-b

💡 Short Explanation

Profit credited to capitals. Loss debited to capitals. Reserves distributed among partners.

✅ Correct Answer Explanation

Correct matching: Profit on Revaluation → Revaluation Dr., Capitals Cr. Loss on Revaluation → Capitals Dr., Revaluation Cr. Reserves → Reserve Dr., Capitals Cr. Accumulated Losses → Capitals Dr., P&L Cr. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Loss and reserve mismatched.
Option C → Profit entry incorrect.
Option D → Multiple incorrect pairings.

🎯 Strategy

Used

Matching Logic

Application:

�� Match treatment with nature of item.

Final Logic:

�� Option B fully correct.

🧠 Memory Trick

"Profit Credit, Loss Debit"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Distribution Rules – Page reference may vary by edition.

14 If the Revaluation Account results in a loss, why is the retiring partner's capital account also debited?

A Because the loss relates to the period when the retiring partner was part of the firm.

B Because the retiring partner must pay a penalty for leaving early.

C Because the continuing partners acquire the retiring partner's share automatically.

D Because it reduces the hidden goodwill proportionately.

💡 Short Explanation

Revaluation belongs to old period. Retiring partner shared past ownership. Loss shared in old ratio.

✅ Correct Answer Explanation

The retiring partner must bear share of losses arising before retirement. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → No penalty involved.
Option C → Acquisition unrelated.
Option D → Hidden goodwill unrelated.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Determine basis of sharing.

Final Logic:

�� Old partners share old losses.

🧠 Memory Trick

"Old Loss = Old Partners"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Revaluation Loss – Page reference may vary by edition.

15 Sequence the steps for handling a General Reserve of Rs. 90,000 upon Inder's retirement (partners Inder, Gajender, Harinder sharing 3:2:1):
1. Credit Inder's Capital with Rs. 45,000, Gajender's with Rs. 30,000, Harinder's with Rs. 15,000.
2. Identify the General Reserve balance of Rs. 90,000.
3. Debit General Reserve A/c by Rs. 90,000.

A 1, 2, 3

B 3, 1, 2

C 1, 3, 2

D 2, 3, 1

💡 Short Explanation

Reserve identified first. Reserve account debited next. Capitals credited finally.

✅ Correct Answer Explanation

Correct order: Identify reserve Debit reserve Credit partners' capitals Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Entry impossible before identification.
Option B → Identification should come first.
Option C → Debit must precede credits.

🎯 Strategy

Used

Sequential Journal Logic

Application:

�� Arrange reserve transfer steps.

Final Logic:

�� Source account adjusted before distribution.

🧠 Memory Trick

"Identify → Debit → Credit"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Reserve Transfer – Page reference may vary by edition.

16 Narang, Suri, and Bajaj share profits in 1/2, 1/6, and 1/3. If the Reserve is Rs. 12,000, what amount is credited to Suri's Capital Account on retirement?

A Rs. 6,000

B Rs. 4,000

C Rs. 2,000

D Rs. 12,000

💡 Short Explanation

Reserve distributed in old ratio. Suri's share equals 1/6. Amount calculated proportionately.

✅ Correct Answer Explanation

Calculation: 12000 × 1/6 = 2000 Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Half share incorrect.
Option B → One-third incorrect.
Option D → Entire reserve not credited.

🎯 Strategy

Used

Reserve Distribution Calculation

Application:

�� Reserve × Profit Share.

Final Logic:

�� Suri receives Rs. 2,000.

🧠 Memory Trick

"Reserve Follows Old Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Distribution of Reserves – Page reference may vary by edition.

17 A firm has an accumulated loss of Rs. 15,000 in the Profit & Loss A/c. Partners share equally. What is the exact debit amount to the retiring partner's capital account?

A Rs. 15,000

B Rs. 5,000

C Rs. 10,000

D Rs. 0

💡 Short Explanation

Accumulated losses shared equally. Three partners assumed equally. One-third debited.

✅ Correct Answer Explanation

Calculation: 15000 ÷ 3 = 5000 Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Entire loss not borne.
Option C → Incorrect division.
Option D → Loss must be adjusted.

🎯 Strategy

Used

Loss Distribution Calculation

Application:

�� Total Loss ÷ Number of Partners.

Final Logic:

�� Retiring partner bears equal share.

🧠 Memory Trick

"Loss Shared in Old Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Accumulated Losses – Page reference may vary by edition.

18 Which of the following is true regarding accumulated losses transferred on retirement?
1. They reduce the final amount payable to the retiring partner.
2. They are distributed in the gaining ratio.
3. The Profit and Loss Account is credited.

A 1 and 3 only.

B 1 and 2 only.

C 2 and 3 only.

D 1, 2, and 3.

💡 Short Explanation

Accumulated losses reduce capitals. Profit & Loss Account credited. Distribution uses old ratio.

✅ Correct Answer Explanation

Accumulated losses are transferred through: Partners' Capital A/c Dr. To Profit & Loss A/c Hence, statements 1 and 3 are correct.

❓ Why Other Options Are Incorrect

Option B → Gaining ratio not used.
Option C → Statement 1 also true.
Option D → Statement 2 incorrect.

🎯 Strategy

Used

Statement Verification

Application:

�� Apply accumulated loss treatment.

Final Logic:

�� Losses reduce settlement amount.

🧠 Memory Trick

"Loss Debit Capitals"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Transfer of Losses – Page reference may vary by edition.

📄 Passage

If a partner retires in the middle of the year, their share of profit can also be calculated on the basis of sales. For instance, if the agreement provides that the share of profit will be worked out based on sales, the firm compares the sales of the previous year to the profits of the previous year to find a ratio, and applies it to the sales of the intervening period. For bringing the retiring partner's share of profit for the intervening period into the books, a Profit & Loss Suspense Account is debited.

According to the passage, if the previous year's sales were Rs. 8,00,000 yielding a profit of Rs. 1,00,000, and intervening sales are Rs. 1,50,000, what is the total firm's estimated profit for the intervening period?

A Rs. 1,00,000

B Rs. 7,500

C Rs. 15,000

D Rs. 18,750

💡 Short Explanation

Previous profit ratio determined first. Applied to intervening sales. Estimated profit calculated.

✅ Correct Answer Explanation

Profit Ratio: 100000 / 800000 = 1/8 Estimated Profit: 150000 × 1/8 = 18750 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Previous profit only.
Option B → Half calculation incorrect.
Option C → Wrong percentage applied.

🎯 Strategy

Used

Sales-Based Profit Estimation

Application:

�� Profit Ratio × Intervening Sales.

Final Logic:

�� Estimated profit = Rs. 18,750.

🧠 Memory Trick

"Past Ratio Applied to Sales"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Profit Based on Sales – Page reference may vary by edition.

📄 Passage

Based on the passage, the primary alternative to calculating mid-year profit based on average time/past profits is calculating it based on:

A Total assets valuation.

B Future expected cash flows.

C Sales during the intervening period.

D The retiring partner's fixed capital ratio.

💡 Short Explanation

Sales method estimates interim profit. Past profit ratio applied. Intervening sales used.

✅ Correct Answer Explanation

The passage specifically identifies sales-based calculation as an alternative method. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Asset valuation unrelated.
Option B → Cash flow method absent.
Option D → Capital ratio unrelated.

🎯 Strategy

Used

Passage Interpretation

Application:

�� Identify alternative method mentioned.

Final Logic:

�� Sales basis used for interim profit.

🧠 Memory Trick

"Interim Profit from Sales"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Mid-Year Profit Calculation – Page reference may vary by edition.

CUET UG Accountancy Booster Test 2 Revaluation & Accumulated Adjustments

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