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

Which of the following statements results in the reconstitution of a partnership firm:-

(A) Change in profit sharing ratio among partners.
(B) Admission of a new partner.
(C) Dissolution of a partnership firm.
(D) Dissolution of a partnership.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

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

Any change in the agreement among the partners reconstitutes the firm: the old agreement ends, a new one begins, and the firm goes on. Ending the firm itself is not a reconstitution.

(A) Change in profit sharing ratio among partners. Correct. The partners remain the same but their agreement changes, so the firm is reconstituted.

(B) Admission of a new partner. Correct. A new member joins and a new agreement is formed.

(C) Dissolution of a partnership firm. Incorrect. Dissolution of the firm ends the relationship among all the partners and closes the business, so there is no firm left to reconstitute.

(D) Dissolution of a partnership. Correct. Dissolution of the partnership (on retirement, death and the like) ends only the existing agreement; the firm continues under a changed agreement, which is reconstitution.

NCERT (2026-27 edition):
Reconstitution of a Partnership Firm – Admission of a Partner – “… Any change in the existing agreement amounts to reconstitution of the partnership firm. This results in an end of the existing agreement and a new agreement comes into being with a changed relationship among the members of the partnership firm and/or their composition. However, the firm continues.”

NCERT (2026-27 edition):
Dissolution of Partnership – “As stated earlier dissolution of partnership changes the existing relationship between partners but the firm may continue its business as before. The dissolution of partnership may take place in any of the following ways: (1) Change in existing profit sharing ratio among partners; (2) Admission of a new partner; (3) Retirement of a partner; (4) Death of a partner; (5) Insolvency of a partner; (6) Completion of the venture, if partnership is formed for that; and (7) Expiry of the period of partnership, if partnership is for a specific period of time; …”

NCERT (2026-27 edition):
Dissolution of a Firm – “Dissolution of a partnership firm may take place without the intervention of court or by the order of a court, in any of the ways specified later in this section. It may be noted that dissolution of the firm necessarily brings in dissolution of the partnership. However, dissolution of partnership would not necessarily involve dissolution of firms.”