Question

why do we need revolution account?​

Answer 1

$\huge\mathfrak{\underline{\underline{\red{need \: of \: revolution \: account}}}}$

Revaluation account is a nominal accountprepared for the purpose of distributing and transferring the profit or loss arising out of increase or decrease in the book value of assets and/ or liabilities of the partnership firm at the time of Change in profit sharing ratio, admission of a partner, retirement of a partner

Answer 2

Answer:

Revaluation account is a nominal accountprepared for the purpose of distributing and transferring the profit or loss arising out of increase or decrease in the book value of assets and/ or liabilities of the partnership firm at the time of Change in profit sharing ratio, admission of a partner, retirement of a partner.

The main purpose to open Realisation Account is to ascertain the profit or loss due to the realisation of assets and liabilities. Realisation profit (if credit side > debit side) or realisation loss (if debit side > credit side) are transferred to the Partner's Capital Account in their profit sharing ratio.

A Revaluation Account is prepared in order to ascertain net gain or loss on revaluation of assets and liabilities and bringing unrecorded items into books. The Revaluation profit or loss is transferred to the capital account of all partners including retiring or deceased partners in their old profit sharing ratio.

Revaluation account and Realisation Account are two types of nominal account, which are concerned with the partnership.

The following accounts are not transferred to Realisation Account:

• Cash/Bank A/c,
• Bank overdraft,
• Reserve fund,
• Credit/Debit balance of Profit & Loss Account,
• Partners' Capital Accounts and.
• Partner's Loan Account.

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