Which of the following events result in the reconstitution of a partnership firm?(A) Change in the profit-sharing ratio among existing partners.(B) Admission of a new partner.(C) Dissolution of a partnership firm.(D) Dissolution of a partnership due to death or retirement.Choose the correct answer from the options given below:
- A(A), (B) and (C) only
- B(A), (B) and (D) only
- C(A), (B), (C) and (D)
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
Let us clarify the legal distinction between the dissolution of a partnership and the dissolution of a firm:Reconstitution of a Firm (Dissolution of Partnership): This occurs when the existing economic agreement changes, but the business continues under a new structure. Examples include a change in profit-sharing ratios (A), the admission of a partner (B), and retirement or death (D).Dissolution of the Firm (C): This involves completely closing down all business operations, liquidating assets, and ending the partnership's legal existence. It is not a reconstitution.Therefore, events (A), (B), and (D) cause reconstitution.