Question

Dissolution of partnership means:

• A. Ending of partnership agreement only
• B. Closing down of business completely
• C. Change in profit sharing ratio
• D. Admission of a new partner

Hint:

Dissolution of a partnership is not just the end of an agreement; it usually involves closing the business and settling accounts and liabilities.

Answer 1

The Correct Option is B

Step 1: Understanding dissolution of partnership.
Dissolution of a partnership refers to the process by which the partnership ceases to exist as a business entity. It generally involves the end of the partnership agreement, the liquidation of assets, and the closing of business operations.
Step 2: Analysis of options.

• (A) Ending of partnership agreement only: Incorrect. Dissolution involves more than just ending the agreement. It also typically involves closing down the business.
• (B) Closing down of business completely: Correct. Dissolution of partnership often involves winding up the business operations, selling off assets, and settling liabilities.
• (C) Change in profit sharing ratio: Incorrect. A change in the profit-sharing ratio refers to a modification of the partnership agreement, not dissolution.
• (D) Admission of a new partner: Incorrect. Admission of a new partner is an event that may change the partnership agreement but does not constitute dissolution.

Step 3: Conclusion.
The dissolution of a partnership generally involves the complete closure of the business and not just an end to the partnership agreement. Final Answer:} Closing down of business completely.