Question : Choose which of the following statements is correct.
Option 1: Change in the profit-sharing ratio among the existing partners results in reconstitution of the firm.
Option 2: Change in Profit-sharing Ratio leads to dissolution of partnership and not of the firm.
Option 3: Both 1 and 2
Option 4: None of the above
Correct Answer: Both 1 and 2
Solution : Answer = Both 1 and 2
When there's a change in the profit-sharing ratio among existing partners, it results in the reconstitution of the firm. However, a change in the profit-sharing ratio does not lead to the dissolution of the partnership or the firm, as the partnership can continue with the new profit-sharing arrangement.
Hence, the correct option is 3.
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