Read the following facts about admission of a partner.A. A new partner acquires his share from the old partners that reduces the old partners' share in profits.B. The partners' capital must be adjusted so as to be proportionate to their new profit sharing ratio.C. Assets and Liabilities may be revalued and reassessed on admission of a partner.D. Adjustment for Reserves and Accumulated profits/loss is done.E. Profit sharing ratio of existing partners may change on admission of a new partner. Choose the correct answer from the options given below:
- AA, B, C and D only
- BB, C, D and E only
- CC, D and E only
- DA, C, D and E only
Solution & Step-by-step Explanation
Let's analyze the statements: A, C, D, E are unconditionally true facts and standard operating accounting procedures that accompany reconstitution via admission.Statement B states that partners' capital must be adjusted to be proportionate. Capital adjustment is optional and only performed if explicitly agreed upon by the partners or mandated by the partnership agreement. It is not an absolute requirement for every admission.Thus, A, C, D, and E only is the accurate option selection.