Question

When a partner is added to a partnership: Multiple Choice

1. The previous partnership ends.
2. The underlying business operations must close and then re-open.
3. The underlying business operations end.

Answer 1

The correct answer is letter (1): The previous partnership ends.

Step-by-step explanation:

A partnership is an organization where two or more individuals operate a business. They share the profits in proportion to their percentage partnership interest. There are two (2) types of partnerships: general partnerships and limited partnerships. General partnerships share unlimited liability, while limited partnerships do not. In any of the cases, if a new partner is to be added to the organization, the previous partnership dissolves.