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.
When a partnership firm undergoes reconstitution, it implies there are changes in the existing partnership agreement, such as the admission of new partners, retirement of existing partners, or changes in profit-sharing ratios.
Thus, on the admission of the partner W old partnership is reconstituted.