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. S1 only
B. S2 only
C. Neither S1 nor S2
D. Both S1 and S2
Answer: Option D
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 firm has an average profit of ₹50,000, normal rate of return 10%, capital employed ₹4,00,000. Goodwill by capitalization of super profit method (if capitalized at 10%) will be:
Explanation:
Normal profit = 10% of 4,00,000 = 40,000. Super profit = 50,000 - 40,000 = 10,000. Goodwill by capitalization of super profit = 10,000 / 10% = ₹1,00,000.
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