Accountancy Part AAdmission of a Partner

The following are the modes of reconstitution of a partnership firm(A…

The following are the modes of reconstitution of a partnership firm

(A) Death of a partner

(B) Dissolution of the firm by notice

(D) Admission of a new partner

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

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

A partnership is an agreement among the partners. Any change in that agreement is a reconstitution of the firm: the old agreement ends and a new one begins, but the firm continues.

(A) Death of a partner Correct. The deceased partner goes out and the remaining partners carry on the business under a new agreement, so the firm is reconstituted.

(B) Dissolution of the firm by notice Incorrect. Dissolution of the firm ends the firm itself: the business is closed, assets are sold and liabilities paid. Nothing continues, so it is not a reconstitution.

(C) Change in the profit sharing ratio among existing partners Correct. The partners stay the same, but the terms of their agreement change, so the firm is reconstituted.

(D) Admission of a new partner Correct. A new member joins and a new agreement is made among all the partners while the firm goes on.

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. The partners often resort to reconstitution of the firm in various ways such as admission of a new partner, change in profit sharing ratio, retirement of a partner, death or insolvence of a partner.”