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State the Difference Between Dissolution of Partnership and Dissolution of Partnership Firm. - Accountancy

Distinguish Between

State the difference between dissolution of partnership and dissolution of partnership firm.

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Solution

Basis of Difference Dissolution of Partnership Dissolution of Partnership firm
Meaning It means change in the partnership deed (or the agreement) among the partners. It means that the business is wound up and the firm is dissolved.
Discontinuation Business is not discontinued. Business is discontinued, as the firm is dissolved.
Closure of Books of Accounts Books of accounts are not closed, as there is only change in the existing agreement between the partners. Books of accounts are closed, as the business is discontinued.
Assets and Liabilities In this case, the assets and liabilities are revalued. In this case, all the assets are sold off in order to pay the liabilities of the business.
Role of Court There is no intervention by the court. Dissolution of a partnership firm may be done with the consent of the court.
Nature It is voluntary in nature. It may be voluntary (as per the discretion of the partners) or compulsory (as per the order of the court).
Effect It may or may not involve dissolution of the firm. It necessarily involves dissolution of both the partnership as well as of the partnership firm.
Concept: Dissolution of Partnership Firm
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APPEARS IN

NCERT Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts
Chapter 5 Dissolution of Partnership Firm
Exercise | Q 1 | Page 248
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