Question:
A, B and C are partners in a firm. If D is admitted as a new partner, what will be its effect?
A, B and C are partners in a firm. If D is admitted as a new partner, what will be its effect?
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Admission of a partner does not dissolve the firm. It only reconstitutes the partnership with a new agreement.
Updated On: Mar 26, 2026
- Old firm is dissolved
- Old firm and old partnership is dissolved
- Old partnership is reconstituted
- Firm will lose its existence
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The Correct Option is C
Solution and Explanation
Step 1: Concept of admission of a partner.
When a new partner is admitted, the existing partnership agreement ends and a new agreement is created. However, the firm as a business entity continues to exist.
Step 2: Effect on the firm.
- The old partnership is dissolved legally, but not the firm itself.
- A new partnership is formed, including the new partner.
- This process is called "reconstitution of partnership."
Final Answer: \[ \boxed{\text{The old partnership is reconstituted.}} \]
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