Question

Assertion (A): A new partner becomes entitled to share future profits of the firm and also becomes liable for past losses of the firm.

Reason (R): A new partner acquires right in the assets and also becomes liable to any liability incurred by the firm after his admission.

In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are true, but (R) is not the correct explanation of (A).

• Both (A) and (R) are true and (R) is the correct explanation of (A).

• (A) is false, but (R) is true.

• A) is true, but (R) is false.

Answer 1

(A) is false, but (R) is true.

Explanation:

Assertion (A) is false because, by default law, a new partner is not liable for past losses incurred before their admission (as per Section 31(2) of the Indian Partnership Act, 1932). Their liability begins from the date they join the firm. Reason (R) is true because, upon admission, the new partner gains rights in the firm’s assets and becomes fully liable for all debts and actions incurred by the firm after that date.