Question

A new agreement of a partnership firm in replace the old one is formed only in these conditions.

• A. Admission of new partner
• B. Death of a partner
• C. Change in profit sharing
• D. All the above

Answer 1

The correct option is D All the above

Partnership deed can only be revised or changed with the new one on the following conditions.

When a new partner is admitted in the firm, there is a change in profit sharing ration of partners. Moreover, old reserves have to distributed among existing partners. Hence, there is a need to create a new deed.

Death of a partner also leads to creation of a new agreement because the existing partners have to now change the ratios in which reserves and profit have to be distributed.

When profit sharing ratio of existing partners is changed, a new deed is created because partners again need to decide what terms and conditions must be there so that fair treatment is done to each partner.