What are the Differences between Dissolution of Partnership and Dissolution of Firm?

Dissolution of Partnership is the dissolution of partnership enterprise. It happens because of the aspect that when the legitimate association between all the partners, comes to an end, and it is called as dissolution of an enterprise, however, when any partner becomes crippled, then the partnership between the particular partner and other partners of the enterprise, comes to an end, but the enterprise may continue to function, if other partners wish so. Below mentioned are a few key differences between Dissolution of Partnership and Dissolution of Firm :

Basis Dissolution of Partnership Dissolution of Firm
Meaning Dissolution of a partnership – to the adjournment of the association between a partner and the rest of the partners of an enterprise Dissolution of firm – that entire enterprise discontinues to exist, which includes the association among all the partners
Nature Voluntary Compulsory or Voluntary
Courts intervention Court does not interfere, because partnership is the court’s order, dissolved by mutual agreement An enterprise can be dissolved by the courts’ order
Economic association Persists to exist but in a different form Comes to an end
Books of accounts Not closed Are closed
Other dissolution It may or may not involve dissolution of the firm It necessarily involves dissolution of partnership

Dissolution of the partnership leads to the end of the old agreement between the partners and its reinstatement with the new agreement. No physical disposal occurs. On the other hand, in the dissolution of the enterprises assets are disposed of and liabilities are decided.

Also Check: What is Dissolution of Partnership Firm?

The above mentioned is the concept that is explained in detail about the Difference Between Dissolution of Partnership and Dissolution of Firm for the class 12 Commerce students. To know more, stay tuned to BYJU’S.

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