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.
|Basis||Dissolution of Firm||Dissolution of Partnership|
|Meaning||It means the closure of the firm and end of business relationship among all the partners||It means a change in business relationships among the partners. The firm continues its business.|
|Court’s Intervention||It can be either voluntarily by the partners or compulsorily by order of court.||It is always voluntary.|
|Business Continuation||Business of the firm comes to an end.||Business of the firm continues.|
|Closure of Books of Account||Books of accounts of the firm are closed.||Books of account of the firm need not be closed.|
|Assets and Liabilities||Assets 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 Relationship||Economic relationship between/among the partners ends.||Economic relationship between/among the partners changes.|
|Effect||Dissolution of firm also means dissolution of partnership.||Dissolution of partnership does not involve dissolution of the firm.|