Question

Distinguish between dissolution of partnership and dissolution of partnership firm.

Answer 1

Difference between Dissolution of Partnership and Dissolution of Partnership Firm:

1. On the basis of meaning:

(a) Dissolution of partnership refers to the termination of the existing agreement between the partners. A new agreement is then drafted.

(b) Dissolution of partnership firm refers to the termination of the entire business carried out by the firm. The firm is dissolved and partnership comes to an end.

2. On the basis of business continuity:

(a) Dissolution of partnership does not imply that the ongoing business of the firm has come to end. It just signifies a change in the partnership agreement.

(b) Dissolution of partnership firm implies that all businesses carried on by the firm have come to an end.

3. On the basis of court's intervention:

(a) Dissolution of partnership does not involve the intervention of the court. It is carried out with the mutual consent of the partners.

(b) Dissolution of partnership firm can be dissolved by the court's orders.

4. On the basis of assets and liabilities:

(a) Dissolution of partnership only leads to a revaluation of the assets and liabilities and a new Balance Sheet is prepared.

(b) Dissolution of partnership firm requires selling off of all assets and discharging all liabilities and closing all books of accounts.