Question : At the time of reconstitution of a partnership firm, recording of an unrecorded liability will lead to:
Option 1: Gain to the existing partners
Option 2: Loss to the existing partners
Option 3: Neither gain nor loss to the existing partners
Option 4: None of the above
Correct Answer: Loss to the existing partners
Solution : Answer = Loss to the existing partners
Recording an unrecorded liability during the reconstitution of a partnership firm will lead to a loss for the existing partners. This is because the liability, which was previously unaccounted for, will now reduce the net assets of the firm, resulting in a decrease in the capital or profit share of the existing partners.
Hence, the correct option is 2.
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