Dissolution of a Partnership Firm

Lesson

Part 1 — partnership or firm?, the modes of dissolution, the Section 48 order and the Realisation Account.

In this lesson you will

Part 1 at a glance

Compare

Partnership or firm: what is dissolved?

Dissolution of partnership

Dissolution of the firm

Table comparing dissolution of partnership, where only the agreement ends and the business and books carry on, with dissolution of the firm, where the business is closed, assets are sold, liabilities paid and the books closed
Basis	Dissolution of partnership	Dissolution of the firm
What ends	The old agreement among the partners	The business and every partner’s relationship
Business	Carries on (reconstituted firm)	Is closed
Books	Continue; assets and liabilities revalued	Closed; assets sold, liabilities paid
Examples	Admission, retirement, death, change in ratio	Agreement to close, unlawful business, court order

Diagram

Every dissolution of a firm is also a dissolution of partnership; not the other way round