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easyMCQCUET Accountancy 2023 20 June Shift 22026Accountancy
1 mark

Select the option from the following that is not considered a mode of reconstitution of a partnership firm.

  1. A
    Change in the profit-sharing ratio among the existing partners
  2. B
    Admission of a new partner
  3. C
    Retirement of an existing partner
  4. D
    Dissolution of a partnership firm

Solution & Step-by-step Explanation

Let's distinguish between reconstitution and firm dissolution:\begin{itemize}\item \textbf{Reconstitution} involves an internal rearrangement of the partnership agreement (e.g., changes in ratios, admission, retirement, or death) where the entity's economic links are re-framed but the firm continues its business operations.\item \textbf{Dissolution of a partnership firm} implies that the entire legal business entity completely winds up its commercial operations, liquidates its assets, and closes its books permanently. Hence, it represents the total dissolution of the firm, not a structural reconstitution.\end{itemize}

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Select the option from the following that is not considered a mode of reconstitution of a partnership firm.
A
Change in the profit-sharing ratio among the existing partners
B
Admission of a new partner
C
Retirement of an existing partner
D
Dissolution of a partnership firm

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