Multiple choice

The reconstitution of the firm takes place in case of

  1. admission of a partner

  2. retirement of a partner

  3. expulsion or death of a partner

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Reconstitution means change in profit-sharing ratio due to structural change. Admission adds new partner altering ratios. Retirement removes partner changing ratios. Expulsion forcibly removes partner. Death of partner triggers succession. All these events fundamentally change the firm's structure and require revaluation of assets and goodwill adjustment.

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