Question

Assertion (A): Partnership Agreement becomes the basis of the relationship among the partners.

Reason (R): Partnership is the result of an agreement between two or more persons to do business and share its profits and losses.

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:

The Assertion and Reason are both correct because a partnership is fundamentally a contractual relationship. By definition, it is formed through an agreement to conduct business and share profits/losses. Consequently, this specific agreement serves as the legal basis that dictates how partners behave, their duties, and how disputes are settled. Thus, the Reason directly explains why the Assertion is true.