Which of the following statements results in the reconstitution of a…

The correct answer is Option (2) → (A), (B) and (D) only

Reconstitution of a partnership firm occurs when there is a change in the agreement among the partners, leading to a change in the $\mathbf{relationship}$ among the partners while the $\mathbf{firm}$ $\mathbf{continues}$ its business. It involves the drawing up of a new partnership deed.

The events that lead to the reconstitution of a partnership firm are:

• $A$ Change in profit sharing ratio among partners: A change in the ratio alters the partners' share in profits and liabilities, thus necessitating a new agreement.

• $B$ Admission of a new partner: The entry of a new partner changes the existing agreement and the relationship between all partners.

• $D$ Dissolution of a partnership: This means the $\mathbf{change}$ in the relationship among partners, while the $\mathbf{firm}$ $\mathbf{continues}$. This is distinct from the dissolution of a firm. 

Why Statement C is incorrect:

• $C$ Dissolution of a partnership firm: The dissolution of a partnership $\mathbf{firm}$ means the $\mathbf{closure}$ of the entire business, leading to the liquidation of its assets and settlement of liabilities. It marks the $\mathbf{end}$ of the firm, $\mathbf{not}$ its reconstitution.