Assertion (A): When the partners change their profit-sharing ratio, it leads to dissolution of old firm and new firm comes into existence.
Assertion (A): When the partners change their profit-sharing ratio, it leads to dissolution of old firm and new firm comes into existence.
Reason (R): Change in profit sharing ratio does not dissolve the firm but brings an end to old partnership and new partnership comes into existence.
in the context of above two statements, which of the following is correct?
a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
c) Only Assertion (A) is correct
d) Assertion (A) is not correct but the Reason (R) is correct.
Anurag Pathak Changed status to publish May 5, 2023
Ans – d)
Explanation:-
When the partners change their profit-sharing ratio, it does not lead to the dissolution of the old firm and the new firm does not comes into existence.
thus, assertion (A) is incorrect.
When profit sharing ratio changes, it leads to new partnership and does not lead to dissolution of the partnership firm. thus Reason (R) is correct.
Anurag Pathak Changed status to publish May 5, 2023
