Revaluation account entries and closing for asset changes

Steps:

• Credit side of revaluation account records gains, such as increases in non-current asset values (Dr Asset, Cr Revaluation).
• Thus, a credit entry means asset value has risen, not fallen: statement 1 false.
• Debit side records losses, like decreases in asset values (Dr Revaluation, Cr Asset).
• If net profit (credit balance), close by Dr Revaluation, Cr Partners' capitals: credit entry to capitals indicates profit, statement 2 true.

Why A is correct:

• A identifies statement 1 as false (credit side for gains, per standard partnership revaluation entries) and 2 as true (closing profit requires crediting capitals).

Why the others are wrong:

• B incorrectly deems statement 2 false, ignoring credit to capitals in profit closure.
• C incorrectly deems statement 1 true, as credit side signals asset rise, not fall.
• D deems both true, contradicting credit side meaning.

Final answer: A