Y and Z are partners in a firm. If W is admitted as a new partner, what will happen?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Old partnership is reconstituted
Admitting W changes the agreement among the partners, but the firm carries on its business. This is a reconstitution of the partnership: a new agreement is made and the firm continues.
Why the other options are incorrect
Option (1) Old firm is dissolved — Incorrect. The firm is dissolved only when its business is closed and its affairs wound up.
Option (3) Old firm and Old partnership is dissolved — Incorrect. Only the old agreement ends; the firm itself continues.
Option (4) Old firm assets realised — Incorrect. Assets are realised on dissolution of the firm; on admission they are only revalued.
NCERT (2026-27 edition):
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