Question

On the admission of a new partner:

Options

• Old firm is dissolved

• Old partnership is dissolved

• Both old partnership and firm are dissolved

• Neither partnership nor firm is dissolved

Answer 1

Old partnership is dissolved

Explanation:

On the admission of a new partner, the existing partnership agreement comes to an end, meaning the old partnership is dissolved. However, the firm continues to exist with a new agreement among the partners. This is called reconstitution of the firm, not dissolution of the firm.