Dele and Seun who are in partnership, have decided to covert their business into a limited liability company where both become directors. To convert the business?

  • A they will simply continue since there are no new members
  • B the partnership is formally ended and new company books opened
  • C the shares and all other items will be shared equally and not in their former ratios
  • D computation of goodwill must be done as it is legally required
jamb 1999accounting

The correct answer is B. the partnership is formally ended and new company books opened

When a partnership is converted into a limited liability company, the correct answer is the partnership is formally ended and new company books are opened.

This is because a partnership and a limited liability company are two distinct legal entities with different structures, rights, and obligations. Therefore, the partnership must be formally dissolved, and a new set of books must be opened for the newly formed company

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