Question

Decrease in the value of liability is debited to revaluation account. State true or false
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Answer 1

Answer : False

Explanation : Decrease in value of liability is created to revaluation Account because Revaluation Account is nominal Account [ debit all expenses and losses & credit all income and gains ]

In simple , decrease in value of liability means benefit to company and hence shown on credit side of revaluation Account instead of debit side.

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Answer 2

Answer:

False. Decrease in the value of liability is credited to revaluation account.

Explanation:

Realisation Account is opened  if the firm goes into liquidation, so as to close the books of accounts and also to compute the net effect (profit or loss) arising due to the realisation of assets and settlement of liabilities.

Revaluation account is a nominal account. The rule of nominal account says Debit all expenses and losses, credit all incomes and gains.

Decrease in the value of liability is a gain for any business. Hence it must be credited in the Revaluation account.

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