Question

State the following statement is true:

There is no difference between the dissolution of partnership and dissolution of firm.

Answer 1

This statement is false.

Explanation:

• Dissolution of Partnership refers to the end of the partnership agreement between partners. However, the firm may continue to operate with the remaining partners, possibly under a new agreement. This can occur due to changes like a partner's retirement or death.
• Dissolution of Firm on the other hand, involves the complete closure of the business, where assets are liquidated, liabilities are settled, and the remaining balance is distributed among the partners. This marks the end of the business operations entirely, not just the partnership agreement.