Assertion: Admission of a partner means reconstitution of the partnership whereby an old partnership ceases to exist and a new partnership comes into existence.
Reasoning: When a partner is admitted the number of partners increases and also the profit-sharing ratio changes. However, the firm continues.
Reasoning: When a partner is admitted the number of partners increases and also the profit-sharing ratio changes. However, the firm continues.
Answer & explanation
Correct answer: option 1
Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.
Partnership is an agreement between two or more people for sharing the gains of a trade carried by all or any one of them who is acting for all. Any change in the current agreement is called as reconstitution of the partnership firm.