CBSE 2024, Set 1

Question

Assertion (A): Each partner is a principal as well as an agent for all the other partners.
Reason (R): As per the definition of Partnership Act, partnership business may be carried on by all the partners or any of them acting for all.
Choose the correct option from the following: A). Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A). B). Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). C). Assertion (A) is correct, but Reason (R) is incorrect. D). Assertion (A) is incorrect, but Reason (R) is correct.

Edvaya · Accepted Answer

The correct answer is Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).. According to Section 4 of the Indian Partnership Act, 1932, a partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Therefore, mutual agency exists where each partner acts as both an agent (binding others) and a principal (being bound by others). Hence, both A and R are correct, and R explains A.

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Accountancy > Accounting For Partnership Firms > Fundamentals Of Partnership

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