Question

In dissolution of partnership, business ________ whereas in dissolution of firm, the business is ________.

• A. Closes, Continued
• B. Partly closes, Continued
• C. Continues, Closed
• D. Continues, Partly closed

Answer 1

The correct option is C Continues, Closed

According to Section 39 of the partnership act 1932, the dissolution of partnership between all the partners of a firm is called dissolution of the firm.

The act that recognizes the difference in the breaking of relationship between all the partners is termed as the dissolution of partnership firm.

There are various differences between dissolution of partnership and dissolution of firm. Economic relationship is one, where the economic relationship between the partners continues though in a changed form in dissolution of partnership, whereas, economic relationship between the partners comes to an end in dissolution of firm.