Identify, out of the following, the events that lead to reconstitutio…

Identify, out of the following, the events that lead to reconstitution of partnership firm.

A. Retirement of a Partner
B. Admission of a Partner
C. Change in Profit Sharing Ratio
D. Dissolution of partnership firm
E. Death of Partner

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → A, B, C and E only

Reconstitution changes the agreement among the partners while the firm continues.

(A) Retirement of a Partner – reconstitutes the firm.

(B) Admission of a Partner – reconstitutes the firm.

(C) Change in Profit Sharing Ratio – reconstitutes the firm.

(E) Death of Partner – reconstitutes the firm.

(D) Dissolution of partnership firm – not a reconstitution. It ends the relationship among all the partners and brings the firm to an end.

NCERT (2026-27 edition):
Introduction – “… 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.”

NCERT (2026-27 edition):
Introduction – “… According to Section 39 of the partnership Act 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm. That means the Act recognises the difference in the breaking of relationship between all the partners of a firm and between some of the partners; and it is the breaking or discontinuance of relationship between all the partners which is termed as the dissolution of partnership firm.”