Accountancy Part AAdmission of a Partner

Which of the following is not a mode of reconstitution of a partnersh…

Which of the following is not a mode of reconstitution of a partnership firm?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Dissolution of partnership firm

Reconstitution means that the existing agreement among the partners ends and a new agreement takes its place, while the firm carries on. Dissolution of the firm brings that firm to an end, so it is not a way of reconstituting it.

Option (1) Admission of a new partner — A mode of reconstitution. A new partner joins and a new agreement is made, and the firm continues.
Option (2) Change in the profit sharing ratio among the existing partners — A mode of reconstitution. The same partners change the terms of their agreement, and the firm continues.
Option (3) Death of a partner — A mode of reconstitution. The firm is reconstituted when the remaining partners continue the business under a new agreement.

NCERT (2026-27 edition):
Modes of Reconstitution of a Partnership Firm – “Reconstitution of a partnership firm usually takes place in any of the following ways: Admission of a new partner: A new partner may be admitted when the firm needs additional capital or managerial help. … Change in the profit sharing ratio among the existing partners: Sometimes the partners of a firm may decide to change their existing profit sharing ratio. … Retirement of an existing partner: It means withdrawal by a partner from the business of the firm which may be due to his bad health, old age or change in business interests. … Death of a partner: Partnership may also stand reconstituted on death of a partner, if the remaining partners decide to continue the business of the firm as usual.”

Which of the following is not a mode of reconstitution of a partnership firm?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Dissolution of partnership firm

Option (1) Admission of a new partner — A mode of reconstitution. A new partner joins and a new agreement is made, and the firm continues.
Option (2) Change in the profit sharing ratio among the existing partners — A mode of reconstitution. The same partners change the terms of their agreement, and the firm continues.
Option (3) Death of a partner — A mode of reconstitution. The firm is reconstituted when the remaining partners continue the business under a new agreement.