Question

Assertion (A): Partner’s private property can be used in paying off the firm’s debts. 

Reason (R): In case of partnership firm, partner’s liability is unlimited.

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).

• Both (A) and (R) are false.

• Only (A) is true.

Answer 1

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

Explanation:

In a partnership firm, each partner has unlimited liability, meaning their private property can be used to pay off the firm’s debts if the firm’s assets are insufficient. Thus, the partner’s liability is unlimited, which is why the partner’s private property can be utilised for the firm’s debts.