Question 4: It is agreed and the most important fact that any changes in the partnership affects and leads to reconstitution of a partnership firm. This is because of the nature of agreement and the firm. But in large businesses any change in the member or shareholder's position will not have any impact over the business. The main reasons why people are not ready to start the partnership business is uncertainty in nature and no stability because of disagreement between the partners. Apart from these, the changes in partnership may happen due to admission, retirement, and death of a partner. By keeping the above in view, one of the situations occur and leads to change of your partnership business. During the respective business year, assume that one of the three partners of your business wanted to retire on Ist May and send a notice to all. After a long meeting and discussion made, all the partners agreed to relieve the partner as per his/her request. Based on the accounting principles and partnership deed, it is processed through by considering various adjustments including revaluation concept and the necessary claim amount calculated to be given to the retiring partner. Then the reconstitution will take place with the necessary accounts. Evaluate the above situation and prepare the necessary items in the form of Revaluation Account, Capital Accounts, Bank account and Balance Sheet of your reconstituted partnership with your own data