Question

A, B and C are partners in a firm. If D is admitted as a new partner, what will be its effect?

• A. Old firm is dissolved
• B. Old firm and old partnership is dissolved
• C. Old partnership is reconstituted
• D. Firm will lose its existence

Hint:

Admission of a partner does not dissolve the firm. It only reconstitutes the partnership with a new agreement.

Answer 1

The Correct Option is C

Step 1: Admission Concept.
Upon admitting a new partner, the existing partnership agreement terminates and a new one is established. The business entity, however, continues uninterrupted.

Step 2: Firm Impact.
- The previous partnership is legally dissolved, but the firm's existence persists. - A new partnership is formed, integrating the new partner. - This transition is termed "reconstitution of partnership."

Final Answer: \[\boxed{\text{The partnership is reconstituted.}}\]