Question

Assertion (A): Change in profit sharing ratio of existing partners does not amount to reconstitution of the partnership.

Reason (R): Dissolution of partnership firm leads to reconstitution of partnership.

In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are correct and (R) is the correct reason of (A).

• Both (A) and (R) are correct but (R) is not the correct reason of (A).

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are wrong.

Explanation:

• A change in the profit-sharing ratio is a reconstitution of the partnership.
• Dissolution ends the partnership firm; it does not lead to reconstitution.