S1: Revaluation Account is a nominal account. S2: Revaluation Account is prepared to ascertain the profit or loss on revaluation of assets and liabilities. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Revaluation Account is a nominal account. S2: Revaluation Account is prepared to ascertain the profit or loss on revaluation of assets and liabilities. Which statement(s) is/are correct?
A. Both S1 and S2
B. S1 only
C. S2 only
D. Neither S1 nor S2
Answer: Option A
Solution (By JKSSB Mock Tests)
Revaluation Account records expenses (decreases in asset values) and incomes (increases in liability values), making it a nominal account. Its purpose is to calculate the net effect of revaluation on partners' capital. Both are correct.
A: The Going Concern concept justifies the charging of depreciation. R: Depreciation allocates the cost of an asset over its useful life. Choose the correct option.
A.A is false but R is true
B.Both A and R are true and R is the correct explanation of A
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
The Going Concern concept assumes the business will continue indefinitely, which justifies capitalizing asset costs and depreciating them over their useful lives. R correctly explains the mechanism of depreciation.
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