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

A partnership firm is reconstituted when the existing agreement among the partners changes but the firm continues. If the firm itself is closed down, there is nothing left to reconstitute.

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

(B) Admission of a new partner. Correct. A new member joins, a new agreement comes into being and the firm carries on.

(C) Dissolution of a partnership firm. Incorrect. Dissolution of the firm ends the firm itself; its business stops and its accounts are closed, so it does not result in reconstitution.

(D) Dissolution of a partnership. Correct. Dissolution of the partnership (for example on the retirement or death of a partner) ends the old agreement, but the firm may continue with the remaining partners, which is a reconstitution.

NCERT (2026-27 edition):
Reconstitution of a Partnership Firm – “… 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):
Reconstitution of a Partnership Firm – “… 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):
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.”