Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Admission of a Partner

Question:

At the time of reconstitution of the partnership firm, recording of an unrecorded asset will lead to..........

Options:

Loss to existing partners

Gain to existing partners

Neither gain nor loss to the existing partners

Decrease in Reserves of the firm

Correct Answer:

Gain to existing partners

Explanation:

When WE record an unrecorded asset during the reconstitution of a partnership firm, it typically means recognizing an asset that wasn't accounted for before. The firm is gaining by acknowledging an asset it didn't have on the books.