Question:
Assertion (A): In a partnership firm, the private assets of the partners can also be used to pay off the firm’s debts.
Reason (R): The liability of the partners for acts of the firm is limited.
Choose the correct option from the following:
Assertion (A): In a partnership firm, the private assets of the partners can also be used to pay off the firm’s debts.
Reason (R): The liability of the partners for acts of the firm is limited.
Choose the correct option from the following:
Reason (R): The liability of the partners for acts of the firm is limited.
Choose the correct option from the following:
Show Hint
In a partnership, partners have unlimited liability, unlike in a company where shareholders' liability is limited to their shareholding.
Updated On: Feb 4, 2025
- Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
- Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- Assertion (A) is false, but Reason (R) is true.
- Assertion (A) is true, but Reason (R) is false.
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The Correct Option is D
Solution and Explanation
In a partnership firm, the partners have unlimited liability, which means that in case the firm’s assets are insufficient to pay off its debts, the personal assets of the partners can be used to settle the liabilities. However, the statement in Reason (R) is incorrect as the liability of the partners in a partnership firm is not limited; it is unlimited.
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