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