Question

Assertion (A): Michael, Mike and Stephen were partners sharing profits and losses in the ratio 3 : 2 : 1. Stephen, being a partner, wants that he should be exempted from sharing the losses in the firm.

Reasoning (R): According to the Partnership Act 1932, “It may be agreed between the partners that one or more of them shall not be liable for losses.”

Options

• Both A and R are correct, and R is the correct explanation of A.

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

• A is correct, but R is incorrect.

• A is incorrect, but R is correct.

Answer 1

Both A and R are correct, and R is the correct explanation of A.

Explanation:

Stephen, being a partner, can be exempted from sharing losses if all partners mutually agree. The Indian Partnership Act, 1932, allows partners to decide through agreement that one or more of them will not be liable for losses. Hence, the assertion is correct, and the reason correctly explains it.