A, B and C are partners in a firm. If D is admitted as a new partner then:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Old Partnership is Reconstituted
Admission of a partner changes the agreement among the partners, so the partnership is reconstituted: the old agreement ends and a new one takes its place. The firm itself goes on with its business; it is not dissolved.
Why the other options are incorrect
Option (1) Old Firm is Dissolved — Incorrect. Dissolution of the firm means closing the business and settling accounts; that does not happen on admission.
Option (2) Old Partnership firm is Dissolved — Incorrect. This again speaks of the firm being dissolved; the firm continues under the new agreement.
Option (3) The Old Firm and Old Partnership are both Dissolved — Incorrect. Only the old agreement ends; the firm survives, so both cannot be dissolved.
NCERT (2026-27 edition):
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