Question

What is meant by reconstitution of partnership firm?

Hint:

Reconstitution of a partnership firm helps the business adapt to changing circumstances while maintaining fairness among partners.

Answer 1

Step 1: Definition of Reconstitution of Partnership.
Reconstitution of a partnership firm refers to any changes made to the existing partnership agreement. These changes may arise due to various reasons, such as the admission of a new partner, the retirement or death of a partner, or alterations in the profit-sharing ratio.
Step 2: Reasons for Reconstitution.
The reasons for reconstitution include:
1. **Admission of a New Partner**
2. **Retirement or Death of a Partner**
3. **Change in Profit-sharing Ratio**
4. **Change in the Capital Contributions of Partners**
Step 3: Conclusion.
Reconstitution is essential to adjust to new business circumstances and ensures fair treatment among the partners. Final Answer: \[ \boxed{\text{Reconstitution refers to changes in the partnership firm due to various reasons such as changes in the partners or terms.}} \]