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On admission of a new partner what does distributing old reserves make clear for the new firm?

Answer and explanation

Correct answer: New firm starts free from old accumulated profits

Distributing old reserves keeps old profits limited to old partners. This makes the new firm position clear.

Related tags

New FirmOld ReservesConceptReservesReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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