State the difference between dissolution of partnership and dissolution of partnership firm.
The main differences between Dissolution of Partnership and Dissolution of Partnership Firm are:
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Termination of Business: In dissolution of partnership, the business is not terminated and continues. In dissolution of firm, the business is closed completely.
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Settlement of Assets and Liabilities: In dissolution of partnership, assets and liabilities are revalued and a new balance sheet is drawn. In dissolution of firm, assets are sold and liabilities are paid off.
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Economic Relationship: In dissolution of partnership, the economic relationship between partners continues in a changed form. In dissolution of firm, the economic relationship comes to an end.
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Court's Intervention: Court does not intervene in dissolution of partnership as it occurs by mutual agreement. A firm can be dissolved by court's order.
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Closure of Books: Books of account are not closed in dissolution of partnership. In dissolution of firm, the books of account are closed.
Explanation
The textbook clearly distinguishes between dissolution of partnership (which occurs on admission, retirement, or death of a partner) and dissolution of firm (which involves complete closure of business under Section 39 of Partnership Act 1932). The table in the context provides five clear bases of distinction covering termination of business, settlement of assets/liabilities, court's intervention, economic relationship, and closure of books. Students should present these differences in a point-wise format for better readability and marks allocation.