Retirement of a partner from the partnership firm means:

Reconstitution of Partnership

The correct answer is option 1- Reconstitution of Partnership.

Retirement of a partner from the partnership firm means Reconstitution of Partnership.

On the retirement or death of a partner, the existing partnership deed comes to an end, and in its place, a new partnership deed needs to be framed whereby, the remaining partners continue to do their business on changed terms and conditions. This is called as reconstitution of partnership.