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Question
Why a new partner is admitted to the firm?
Options
To increase the goodwill of the firm
To increase the profit-sharing ratio
To increase the number of partners
To increase the capital of the firm
MCQ
Solution
To increase the capital of the firm
Explanation:
The main purpose of the admission of a new partner is to increase the capital of the firm. When old partners feel that the capital they have already employed in the business is not enough for the future growth of the business. They may admit a new partner to maintain or increase the capital or to build up the financial strength of the business.
shaalaa.com
Admission of a New Partner
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