Difference between Dissolution of Firm and Dissolution of Partnership

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Confused, what is the difference between Dissolution of Firm and Dissolution of Partnership in class 12 CBSE, ISC and state Board.

Don’t worry, It is explained in detail.

Dissolution of firm vs Dissolution of Partnership (Difference and Comparison)

Let’s learn it in detail.

BasisDissolution of FirmDissolution of Partnership
MeaningIt means the closure of the firm and end of business relationship among all the partnersIt means a change in business relationships among the partners. The firm continues its business.
Court’s InterventionIt can be either voluntarily by the partners or compulsorily by order of court.It is always voluntary.
Business ContinuationBusiness of the firm comes to an end.Business of the firm continues.
Closure of Books of AccountBooks of accounts of the firm are closed.Books of account of the firm need not be closed.
Assets and LiabilitiesAssets of the firm are realised and liabilities are settled. The balance amount, if any, is distributed among all the partners.Assets of the firm are revalued and liabilities are reassessed. the gain (profit) of loss due to it, is distributed among the partners in their old profit sharing ratio.
Economic RelationshipEconomic relationship between/among the partners ends.Economic relationship between/among the partners changes.
EffectDissolution of firm also means dissolution of partnership.Dissolution of partnership does not involve dissolution of the firm.

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Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

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