Partnership

Dissolution

Medium

common

Which combination of statements is true about dissolution-

(A). Dissolution of a partnership is different from dissolution of a firm.

(B). A partnership is dissolved when there is a death of a partner.

(C). A firm is dissolved when all partners give consent to it.

(D). A firm is compulsorily dissolved when a partner decides to retire.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A), (B) and (C) only

(B), (C) and (D) only

(A), (C) and (D) only

✅ Correct Option: 2

Let me evaluate each statement about dissolution:

Statement A: Dissolution of a partnership is different from dissolution of a firm.

TRUE - Dissolution of partnership refers to a change in the relationship between existing partners (due to admission, retirement, death, etc.) where the firm may continue with remaining/new partners. Dissolution of firm means complete termination of the business and all partnerships end.

Statement B: A partnership is dissolved when there is a death of a partner.

TRUE - Death of a partner dissolves the existing partnership as it changes the relationship among partners. However, the firm may continue with the remaining partners if they agree to do so.

Statement C: A firm is dissolved when all partners give consent to it.

TRUE - Dissolution by mutual consent is a valid mode of dissolution. When all partners unanimously agree to dissolve the firm, it can be dissolved regardless of the partnership deed terms.

Statement D: A firm is compulsorily dissolved when a partner decides to retire.

FALSE - Retirement of a partner only causes dissolution of partnership (reconstitution), not dissolution of firm. The firm continues with remaining partners. Compulsory dissolution occurs only in specific situations like insolvency of all partners, business becoming illegal, or court order.

Statements (A), (B) and (C) are true.

Correct Answer: Option 2

2025: 2 June Shift 2

An unrecorded asset is taken over by a creditor in full settlement in such a case

2022: 15 July Shift 2

Identify the item credited to Realisation Account in the event of dissolution of a partnership firm.

2025: 13 May Shift 2

Arrange the following in correct order in which assets of the firm can be used in there settlement.

(A) Residue shall be divided between the partners in their profit sharing ratio.

(B) In paying the partners proportionately what is due to him/her on account of capital.

(D) In paying the debts of the firm to the third parties.

Choose the correct answer from the options given below:

2025: 22 May Shift 2

When a partnership firm is dissolved, final payment made to partners is transferred to

2025: 31 May Shift 1

Dissolution of a firm cannot take place in which of the situation-

2026: 19 May Shift 1

Choose the correct order in which the assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied in the dissolution of the firm.

(A) In paying to each partner the residue in profit sharing ratio.

(B) In paying to each partner proportionately what is due to him on account of capital; and

(D) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner' loan);

Choose the correct answer from the options given below:

Solution

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