Reconstitution of a partnership firm usually does not take place at the time of :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Discontinuance of partnership business
Reconstitution means the old agreement among the partners ends and a new one takes its place, while the firm itself continues. Anything that changes the partners or their shares, without closing the business, reconstitutes the firm.
Option (1) Admission of a partner — A mode of reconstitution. A new member joins and the shares of profit are rearranged.
Option (2) Retirement of a partner — A mode of reconstitution. One member leaves and the others carry on under a new agreement.
Option (3) Change in profit sharing ratio among existing partners. — A mode of reconstitution. The partners stay the same, but the agreement on sharing profits changes.
Discontinuance of the business is the opposite case: the firm closes down, which is dissolution of the firm, not reconstitution.
NCERT (2026-27 edition): |