Question:
What is meant by dissolution of partnership firm?
What is meant by dissolution of partnership firm?
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Dissolution does not always mean the closure of the business; it involves the legal end of the partnership agreement.
Updated On: Sep 1, 2025
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Solution and Explanation
Step 1: Definition of dissolution of a partnership.
Dissolution of a partnership firm refers to the process of ending the partnership business. It involves the cessation of the partnership agreement and the settlement of the firm’s assets and liabilities.
Step 2: Causes for dissolution.
The dissolution of a partnership can occur due to several reasons:
1. Mutual agreement of the partners
2. Expiry of the term of the partnership
3. Death or insolvency of a partner
4. The occurrence of an event that makes the partnership business illegal
Step 3: Conclusion.
Thus, dissolution signifies the termination of the business relationship and the winding-up of the partnership. Final Answer: \[ \boxed{\text{Dissolution of a partnership firm refers to the termination of the partnership business.}} \]
Dissolution of a partnership firm refers to the process of ending the partnership business. It involves the cessation of the partnership agreement and the settlement of the firm’s assets and liabilities.
Step 2: Causes for dissolution.
The dissolution of a partnership can occur due to several reasons:
1. Mutual agreement of the partners
2. Expiry of the term of the partnership
3. Death or insolvency of a partner
4. The occurrence of an event that makes the partnership business illegal
Step 3: Conclusion.
Thus, dissolution signifies the termination of the business relationship and the winding-up of the partnership. Final Answer: \[ \boxed{\text{Dissolution of a partnership firm refers to the termination of the partnership business.}} \]
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Top Questions on Dissolution of Partnership Firms
A, B, C, and D share profit and loss in the ratio of 4 : 3 : 2 : 1. The partnership was dissolved on 31st March, 2024. The firm’s balance sheet on this date was as follows:
Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors 1,20,000 Cash at Bank 8,000 Bills Payable 20,000 Bills Receivable 40,000 Capital A 80,000 Debtors 1,40,000 Capital C 1,20,000 Stock 92,000 Capital B 40,000 Capital D 20,000 Total 3,40,000 Total 3,40,000
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Debtors were taken over by the creditors in full settlement of their claim.
Madhavan agreed to pay Mrs. Madhavan’s loan.
50% of the stock was taken over by Chatterjee at 10% less than the book value. The remaining stock was sold at a profit of 20%.
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