Which of the following statements truly makes the distinction between Dissolution of Partnership and Dissolution of Firm:

(A) In dissolution of partnership, business is not terminated, while in dissolution of firm business is terminated.

(B) The Court intervenes in dissolution of Partnership because a partnership is not dissolved by mutual agreement. A firm can not be dissolved by court order.

(C) Economic relationships between partners continue in a changed form in dissolution of partnership. Economic relationships between the partners come to an end at the dissolution of the Firm.

(D) Dissolution of Partnership doesn't require permanent closure of books, while in Dissolution of firm books are closed.

Choose the correct answer from the options given below:

Looking at each statement to identify which truly distinguish between Dissolution of Partnership and Dissolution of Firm:

Statement (A): In dissolution of partnership, business is not terminated, while in dissolution of firm business is terminated.

This is correct. When partnership dissolves (reconstitution), the firm continues its business with remaining/new partners. When firm dissolves, business operations completely cease.

Statement (B): The Court intervenes in dissolution of Partnership because a partnership is not dissolved by mutual agreement. A firm can not be dissolved by court order.

This is incorrect. The statement reverses the facts:

• Dissolution of partnership typically happens by mutual agreement among partners
• Dissolution of firm can be ordered by court under certain circumstances (insanity, permanent incapacity, misconduct, etc.)
• Court intervention is possible in dissolution of firm, not dissolution of partnership

Statement (C): Economic relationships between partners continue in a changed form in dissolution of partnership. Economic relationships between the partners come to an end at the dissolution of the Firm.

This is correct. In dissolution of partnership (reconstitution), continuing partners maintain business relationships in the reformed partnership. In dissolution of firm, all economic relationships terminate after final settlement.

Statement (D): Dissolution of Partnership doesn't require permanent closure of books, while in Dissolution of firm books are closed.

This is correct. During reconstitution (dissolution of partnership), books continue with necessary adjustment entries. In dissolution of firm, books are permanently closed after preparing realization account and settling all accounts.

Therefore, statements (A), (C) and (D) are correct.

Option 2 is the correct answer.