Question:
Clarify the difference between disSolutions of a firm and disSolutions of a partnership.
Clarify the difference between disSolutions of a firm and disSolutions of a partnership.
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DisSolutions of a partnership does not end the firm's operations, while the disSolutions of a firm terminates the business entirely.
Updated On: Nov 5, 2025
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Solution and Explanation
The key differences between the disSolutions of a firm and the disSolutions of a partnership are as follows:
1. Meaning:
- DisSolutions of a partnership refers to the reconstitution of the partnership firm due to the change in the relationship between the partners, such as the admission, retirement, or death of a partner.
- DisSolutions of a firm involves the complete closure of the business and cessation of operations.
2. Continuity:
- In the disSolutions of a partnership, the firm continues with the remaining partners under a new agreement.
- In the disSolutions of a firm, the firm's existence comes to an end.
3. Scope:
- DisSolutions of a partnership affects only the terms of the agreement and profit-sharing ratio.
- DisSolutions of a firm affects all business activities, and assets are liquidated to settle liabilities.
4. Settlement of Accounts:
- In the disSolutions of a partnership, accounts are adjusted, and a new agreement is created.
- In the disSolutions of a firm, accounts are completely settled, and the business is closed.
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Vibha was appointed to look after dissolution work for which she was allowed a remuneration of ₹ 16,000. Vibha agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 15,000 were paid by Vibha.
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