Question

State the following statement is true:

Whenever the partnership changes, the old firm stands dissolved and a new firm comes into existence.

Answer 1

This statement is true.

Explanation:

• When there is a change in the partnership, such as the admission, retirement, or death of a partner, the original partnership agreement is considered dissolved. However, this does not mean the business stops; instead, a new partnership (or firm) is formed under a new agreement with the remaining or new partners.
• The dissolution of the old firm and the formation of a new firm is a legal process, but the business can continue under a new arrangement.