Identify out of the following, that leads 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.
D. Dissolution of partnership firm- It leads to closure of business and partnership firm.
Reconstitution of the partnership firm takes place in the following ways-
* Admission of a new partner
* Change in profit sharing ratio
* Retirement of a partner
* Death of a partner
These modes represent changes in the composition of the partnership.