Which of the following profit existing partners are entitled to share with new partner, when he is admitted in the partnership firm?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Future profits.
When firm requires additional capital or managerial help or both for the expansion of its business a new partner may be admitted supplementing its existing resources. According to the Partnership Act 1932, a new partner can be admitted into the firm only with the consent of all the existing partners unless otherwise agreed upon. With the admission of a new partner, the partnership firm is reconstituted and a new agreement is entered into to carry on the business of the firm.
A newly admitted partner acquires two main rights in the firm–
1. Right to share the assets of the partnership firm;
2. Right to share the profits of the partnership firm.