Question : Assertion (A): A partnership firm does not exist as a separate legal entity apart from the partners who comprise it.
Reason (R): The Central Government has established a limit of 100 partners in a firm.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Both Assertion (A) and Reason (R) are not correct
Correct Answer: Assertion (A) is true but Reason (R) is False
Solution : The Partnership Firm is not legally distinct from the partners. If any of your partners commits fraud. The partners, not the firm, would face legal action. The assertion is correct. The central government has set a limit of 50 partners.
Hence the correct answer is option 3.
Question : Assertion (A): Dissolution of the firm means the dissolution of the partnership between all the partners of the firm.
Reason (R): Dissolution of the firm means the closure of business and therefore means dissolution of
Question : Assertion (A): Dissolution of Partnership results in no change in the economic relationship. Reason (R): Dissolution of Partnership firm results in the ending of the economic relationship.
Question : Assertion (A): Although not specifically mentioned in the definition, the partnership's business should be legal.
Reason (R): Any illegal activity is prohibited in the country. As a result, the business must also be legal to operate.
Question : Assertion (A): Dissolution of Partnership may or may not result into closing down of the business. Reason (R): Dissolution of Partnership firm means close down of business and comes to an end.
Question : Assertion (A): A profit and loss appropriation account is prepared to show how profits are distributed among partners in accordance with the Partnership Deed.
Reason (R): Only the working partner(s) have access to the books of accounts.
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