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PPT - Reconstitution of a Partnership Firm : Admission of a Partner | Accountancy Class 12 - Commerce PDF Download

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Prepared By 
PRASANTH.S.R
Page 2


Prepared By 
PRASANTH.S.R
INTRODUCTION
Partnership is an agreement between two
or more persons for sharing the profits /losses
of a business. Any change in the existing
agreement leads to reconstitution of the
partnership firm. This changes an end of the
existing agreement and a new agreement comes
into being with a changed relationship among
the members. The reconstitution of the firm
occurs in various ways such as admission of a
new partner, change in profit sharing ratio,
retirement of a partner, death or insolvence of a
partner.
Page 3


Prepared By 
PRASANTH.S.R
INTRODUCTION
Partnership is an agreement between two
or more persons for sharing the profits /losses
of a business. Any change in the existing
agreement leads to reconstitution of the
partnership firm. This changes an end of the
existing agreement and a new agreement comes
into being with a changed relationship among
the members. The reconstitution of the firm
occurs in various ways such as admission of a
new partner, change in profit sharing ratio,
retirement of a partner, death or insolvence of a
partner.
ADMISSION OF A NEW PARTNER
A new partner may be admitted
when the firm needs additional capital or
managerial help. According to the
provisions of Partnership Act 1932 unless
it is otherwise provided in the partnership
deed a new partner can be admitted only
when the existing partners unanimously
agree for it.
Page 4


Prepared By 
PRASANTH.S.R
INTRODUCTION
Partnership is an agreement between two
or more persons for sharing the profits /losses
of a business. Any change in the existing
agreement leads to reconstitution of the
partnership firm. This changes an end of the
existing agreement and a new agreement comes
into being with a changed relationship among
the members. The reconstitution of the firm
occurs in various ways such as admission of a
new partner, change in profit sharing ratio,
retirement of a partner, death or insolvence of a
partner.
ADMISSION OF A NEW PARTNER
A new partner may be admitted
when the firm needs additional capital or
managerial help. According to the
provisions of Partnership Act 1932 unless
it is otherwise provided in the partnership
deed a new partner can be admitted only
when the existing partners unanimously
agree for it.
CHANGE IN THE PROFIT SHARING RATIO 
AMONG THE EXISTING PARTNERS
Sometimes the partners of a firm
may decide to change their existing profit
sharing ratio. This may happen an
account of a change in the existing
p a r t n e r s ’ role in the firm.
Page 5


Prepared By 
PRASANTH.S.R
INTRODUCTION
Partnership is an agreement between two
or more persons for sharing the profits /losses
of a business. Any change in the existing
agreement leads to reconstitution of the
partnership firm. This changes an end of the
existing agreement and a new agreement comes
into being with a changed relationship among
the members. The reconstitution of the firm
occurs in various ways such as admission of a
new partner, change in profit sharing ratio,
retirement of a partner, death or insolvence of a
partner.
ADMISSION OF A NEW PARTNER
A new partner may be admitted
when the firm needs additional capital or
managerial help. According to the
provisions of Partnership Act 1932 unless
it is otherwise provided in the partnership
deed a new partner can be admitted only
when the existing partners unanimously
agree for it.
CHANGE IN THE PROFIT SHARING RATIO 
AMONG THE EXISTING PARTNERS
Sometimes the partners of a firm
may decide to change their existing profit
sharing ratio. This may happen an
account of a change in the existing
p a r t n e r s ’ role in the firm.
RETIREMENT OF AN EXISTING PARTNER
It means withdrawal by a partner from the
business of the firm which may be due to his
bad health, old age or change in business
interests. In fact a partner can retire any time if
the partnership is at will.
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FAQs on PPT - Reconstitution of a Partnership Firm : Admission of a Partner - Accountancy Class 12 - Commerce

1. What is reconstitution of a partnership firm?
Ans. Reconstitution of a partnership firm refers to the process of changing the existing partnership agreement by admitting a new partner or removing an existing partner from the firm.
2. How is a new partner admitted into a partnership firm?
Ans. A new partner can be admitted into a partnership firm by a unanimous decision of all existing partners or as per the terms agreed upon in the partnership agreement. The new partner's capital contribution, profit-sharing ratio, and other relevant terms are decided during the admission process.
3. What are the reasons for admitting a new partner into a partnership firm?
Ans. There can be various reasons for admitting a new partner into a partnership firm. Some common reasons include the need for additional capital, expertise, or resources, expansion of business operations, sharing workload, or taking advantage of new business opportunities.
4. Can a partner be removed from a partnership firm?
Ans. Yes, a partner can be removed from a partnership firm. However, the removal process generally requires the consent of all existing partners or as per the terms mentioned in the partnership agreement. Valid reasons for removal may include misconduct, breach of partnership agreement, incapacity, or death.
5. How does the admission of a new partner affect the existing partners' profit-sharing ratio?
Ans. The admission of a new partner may result in a change in the existing partners' profit-sharing ratio. The new partner's capital contribution and agreed share in profits are considered while determining the new profit-sharing ratio. The existing partners may need to adjust their profit shares to accommodate the new partner's share.
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