Question:medium

State two circumstances of a firm reconstitution.

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Reconstitution = the old partnership agreement ends and a new one takes over, firm continues.
Updated On: Sep 24, 2026
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Solution and Explanation

Step 1: Note that a change in ratio is also reconstitution, even without a membership change:
If the same partners simply agree to alter their profit-sharing ratio, the old agreement ends and a new one begins — this too is a reconstitution.

Step 2: Pick two concrete, distinct examples:
(i) A change in the existing partners' profit-sharing ratio, and (ii) Admission of a new partner — either is a valid, distinct circumstance of reconstitution.

Final Answer:
Any two of: admission of a new partner, retirement/death of a partner, or a change in the profit-sharing ratio among existing partners.
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