Question

Assertion (A): At the time of admission of a new partner in a partnership firm, the newly admitted partner brings an agreed amount of capital either in cash or in kind.

Reason (R): On admission, the new partner gets the right to acquire share in the assets and profits of the partnership firm.

Choose the correct option from the following:

Options

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

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

• Assertion (A) is correct, but Reason (R) is incorrect.

• Assertion (A) is incorrect, but Reason (R) is correct.

Answer 1

Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Explanation:

Two statements share a direct cause-and-effect relationship:

• The new partner brings in capital.
• The new partner receives ownership rights to the firm's assets and future profits.

The incoming partner is legally required to contribute capital specifically in exchange for acquiring those ownership and profit rights. Therefore, the Reason explains the purpose behind the Assertion.